British manufacturing activity unexpectedly picked up in September amid a rebound in export orders and an acceleration in factory output, a survey showed today.
The CIPS/RBS manufacturing Purchasing Managers' Index rose to 54.4 in September from a downwardly revised 53.0 in August. Analysts had expected a reading of 53.
The figures are likely to raise expectations of another Bank of England interest rate increase from 4.75 per cent this year.
Some had begun to doubt the need for further tightening, particularly after a surprise downward revision to second-quarter growth data last week.
The pound hit a two-year high on a trade-weighted basis in September, but its strength does not appear to have dented foreign demand for British goods, with the export orders index rebounding to 53.1 from 47.7 in August.
The broader measure of new orders also rose, encouraging manufacturers to boost output at its fastest rate since July 2004.
That in turn helped to push employment levels higher in September, after a contraction in August.