News Worms
News Worms

Pound Falls As UK Factory PMI Rises Less-than-expected

Pound Falls As UK Factory PMI Rises Less-than-expected

German manufacturing growth expanded at the fastest pace in nearly six-and-a-half years in September, driven by new orders mainly from Asia, a survey showed on Monday.

The Philippines' manufacturing Purchasing Managers' Index (PMI) for the month of September has slightly improved from August figure, but growth remains subdued.

Strong demand at the end of the third quarter fuelled the fastest growth in orders since June and prompted manufacturers to hire new staff at a rate not seen since May 2011.

Meanwhile, the pace of job creation eased to the weakest since October 2016.

While the latest gain in new orders was slower than August, companies reported that demand remained solid in both domestic and overseas markets.

The weak pound was cited by some firms for helping to boost exports, though its impact has diminished compared to earlier this year. However, the flipside comes in the form of the increasing cost pressures that manufacturers in the United Kingdom face from Sterling weakness, which in turn increases the cost of imports. Quantities of purchases increased amid reports of efforts to replenish stocks in line with forecasts of further improvements in demand.

By contrast, the manufacturing sector in the eurozone is growing at its fastest pace for six-and-a-half years.

"For September, the decline in the CBI's industrial trends survey suggests that sentiment moderated over the month and we look for the headline PMI index to fall to 56.0", says Nikesh Sawjani, an economist at Lloyds Banking Group.

The Australian Dollar Pound (AUD GBP) exchange rate advanced at the start of this week's session as Sterling was undermined by a weak Manufacturing PMI.

Neil Lloyd, sales director at law firm, FBC Manby Bowdler, observed: "The strong performance this month should come as no surprise". Longer lead times stemmed from a lack of raw materials among vendors, according to anecdotal evidence. "There were also reports of rising cost inflation affecting production levels", added Aw.

"This appears to be reflected in the latest PMI, which, while moderately below August's result, still shows UK Manufacturing to be performing strongly".


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