A recent survey has shown that the UK’s manufacturing sector surged in September, growing at its fastest rate since June 2014.
The Markit/CIPS purchasing managers’ index (PMI) for the sector increaed to 55.4 in September from 53.4 in August, a figure above 50 that shows expansion.
The weakening of the pound since the Brexit vote had continued to boost exports, the survey also found. However, the weak pound had pushed up companiesâ costs “at a double-digit annual rate”.
A weakening of the pound has made UK goods cheaper for buyers from overseas, but raises the cost of goods imported into the UK.
Since the UK’s vote to leave the European Union, the pound has dropped in value by more than 10% against both the US dollar and the euro.
Rob Dobson, HIS Markit senior economist, commented: “The weak sterling exchange rate remained the prime growth engine, driving higher new orders from Asia, Europe, the US and a number of emerging markets.
“The domestic market is also still supportive of growth, especially for consumer goods.”
Higher import costs as a result of the exchange rate had resulted in a further “substantial” increase in average purchase prices, with manufacturers passing on part of the rise to customers in the form of higher charges, the survey found.
However, Dobson said that the resulting inflation was now easing: “It looks as if the recent surge in inflation may not quite reach the peaks of previous bouts such as in 2008 and 2010-11.”
Howard Archer, chief UK and European economist at IHS Global Insight, said that the figures were “a serious and very welcome upward surprise” which was “undeniably encouraging”.
He added: “The robust September manufacturing purchasing survey seemingly further dilutes the case for the Bank of England to cut interest rates again this year.