The purchasing managers’ index (PMI), which provides an insight into the performance of a variety of sectors, hit 55.4 last month, up from 53.4 in August. Any number over 50 indicates an expansion, but this latest figure has defied even the most positive predictions.
A weaker pound following the Brexit vote has boosted exports, but has pushed up the firms’ costs at a “double-digit annual growth”, the report said. High import costs have led to manufacturers passing on part of the price rise to customers in the form of higher charges. However, this period of inflation seems to be cooling slightly, Rob Dobson, senior economist at IHS Markit said: “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.”
The good news should mean the Bank of England will see no reason to further cut interest rates this year, according to Howard Archer, chief UK and European economist at IHS Global Insight, who called the figures “a serious and very welcome upward surprise” and “undeniably encouraging.”
Lee Hopley, chief economist at EEF, was pleased with the results, calling them an “expectation-busting surge in manufacturing activity”, and that current conditions across the industry are “considerably better than business-as-usual.”
