Belfast Telegraph

Weak pound helps manufacturing activity grow for 15th month in row

By Staff Reporter

Activity in Britain's manufacturing industry increased last month as domestic demand drove a raft of new contracts and the weak pound helped deliver further growth in export orders.

The closely watched IHS Markit/CIPS UK Manufacturing purchasing managers' index showed a reading of 56.3 for October, up from 56.0 in September and coming in above economist expectations of 55.9.

A reading above 50 indicates growth.

It was the fifteenth consecutive month of sector expansion, marking a strong start to the final quarter of the year as output and new order growth remained "robust".

Graeme McLaughlin, relationship manager at Barclays in Northern Ireland, said manufacturing here was growing despite fears.

The sector has been rocked in recent weeks after the announcement of the loss of a further 280 jobs at aerospace giant Bombardier, and the potential closure of Schlumberger in Newtownabbey with the loss of 220 jobs.

But Mr McLaughlin said industry would be closely watching the decision of the Monetary Policy Committee (MPC) on interest rates today and, in particular, the impact an increase would have on sterling.

The MPC is expected to announce a rise in the base rate from its historic low of 0.25% in the first interest rate increase since 2007.

Mr McLaughlin said the industry would "also be looking ahead to the Autumn Statement and what that may bring by way of a boost for the sector, and I suspect many will be looking for research and development tax credits to feature and encourage a much-needed increase in investment". 

 The news pushed the pound to its highest level against the US dollar since early October, up 0.2% at 1.331.

Sterling also rose 0.3% versus the euro to 1.143, marking its highest level against the eurozone currency since early June.

Domestic demand was the main driver of new contracts, but export orders also continued to climb thanks in part to the sterling exchange rate, which has made UK goods cheaper for foreign clients.

Companies surveyed said they experienced new work from clients in the US and Europe, as well as South America.

Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply, said: "While trade from export markets slowed slightly, orders from overseas continued to rise for the 18th month, supported by a robust global economy.

"The pound's fluctuating performance may have had some bearing on the softening in export orders, but there were continuing good levels of demand from Europe and the USA, so no cause for concern."

Belfast Telegraph

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