U.K. Manufacturing Accelerates Ahead of Expected BOE Rate Hike

By Wiktor Szary Features Dow Jones Newswires

Activity in the U.K.'s manufacturing sector accelerated in October, as businesses continued to benefit from strong domestic and overseas demand, but input and output inflation grew, signaling further price growth for consumers further down the line.

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The data comes ahead of the Bank of England's key meeting on Thursday, and is likely to reinforce the rate-setting panel's hawkish sentiment. Markets widely expect the bank will increase borrowing costs from 0.25% to 0.5% to curb accelerating inflation, the first rate increase in a decade.

Financial information firm IHS Markit said its purchasing managers index for the manufacturing industry, rose to 56.3 in October, up from the revised reading of 56.0 a month earlier.

This was above the expectations of analysts polled by The Wall Street Journal, who forecast no change compared to last month's unrevised figure of 55.9. The headline figure has been above the 50-point line separating expansion from contraction for 15 months.

"UK manufacturing made an impressive start to the final quarter of 2017 as increased inflows of new work encouraged firms to ramp up production once again," said Rob Dobson, director at IHS Markit, which compiles the survey.

"The continued robust health of manufacturing and rising price pressures will help cement expectations of the Bank of England hiking interest rates," he said.

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Write to Wiktor Szary at Wiktor.Szary@wsj.com

(END) Dow Jones Newswires

November 01, 2017 06:26 ET (10:26 GMT)