Pound boosted as UK manufacturing 'flourishes'

Car production in the UK

The pound has hit its highest level against the US dollar for nearly six years after a survey suggested the UK's manufacturing sector grew at its fastest pace for seven months in June.

The latest Markit/CIPS purchasing managers' index (PMI) for the sector was 57.5, up from 57.0 in May. A reading above 50 indicates expansion.

Survey compiler Markit said the sector continued to "flourish".

The pound rose to $1.7145 on growing expectations of a rate rise this year.

The survey results add to signs that the UK's economic recovery is becoming more balanced.

Pound Sterling v US Dollar

Last Updated at 23 Sep 2014, 02:20 ET *Chart shows local time GBP:USD intraday chart
£1 buys change %
1.6373 +
+0.00
+
+0.07

The latest official estimate of GDP figures, released on Friday, confirmed that the economy grew by 0.8% in the first quarter of the year and also revealed the fastest expansion in business investment in two years.

The PMI survey found that the manufacturing sector created jobs at the strongest pace for more than three years and new orders grew at the fastest pace since November last year.

Strong quarter

Although manufacturing output saw a slight slowdown in the rate of growth last month, Markit said output had now increased for 16 months in a row.

"UK manufacturing continued to flourish in June, rounding off one of the best quarters for the sector over the past two decades," said Rob Dobson, senior economist at Markit.

"With levels of production surging higher, and order books swollen by a further upswing in demand from both domestic and overseas clients, job creation accelerated to its highest for over three years."

The upbeat data boosted the pound, as markets felt it was more likely that the Bank of England would raise UK interest rates before the end of the year.

David Tinsley, UK economist at BNP Paribas, said: "Manufacturing is growing strongly, and work flows suggest this has legs.

"This supports our view that UK GDP accelerated in Q2. As this news flow is absorbed further, rate hike expectations for the first hike in Q4 this year should harden."

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    TESCO 07:17: BBC Breakfast
    Breakfast

    Tesco's share price fell nearly 12% yesterday - that's £2.2bn off the value of the company. Kevin Doran from Brown Shipley tells Breakfast's Steph McGovern: "It's a significant fall because it's a permanent fall... this is a car crash happening in slow motion". He also says he would be "astonished" if this was the end of the bad news.

     
  2.  
    JIMMY CHOO STOCK MARKET FLOAT 07:15:
    A Jimmy Choo shoe

    Luxury shoes brand Jimmy Choo has confirmed its intention to float on the London Stock Exchange this morning. In a statement, chief executive Pierre Denis says the firm has "strong momentum" adding he is confident its future as a public company can only extend its reputation.

     
  3.  
    TESCO 07:13:

    Here's a link to that (very short) statement from Tesco on Alan Stewart's arrival. The supermarket faced criticism after yesterday's revelations that it would be effectively running without a CFO for the rest of the year, had Mr Stewart started in December as originally planned. Will investors react positively to this announcement at the start of trading?

     
  4.  
    TESCO 07:05: Breaking News

    Tesco has said this morning that its new chief financial officer Alan Stewart will join the company today. That's almost three months early.

     
  5.  
    SUGAR Via Twitter Adam Parsons Business Correspondent

    tweets: "Tate and Lyle: Disruption to supply chain in first half of the year has cost business £40m"

     
  6.  
    CHINA MANUFACTURING 07:03: BBC World News
    Rico Hizon

    Some apparently good economic news from China, World Business Report, erm, reports. Activity in manufacturing unexpectedly picked up in September according to the latest figures, even as factory employment slumped. Rico Hizon in Singapore tells the programme that it is a big relief for investors after a string of negative news out of China in recent weeks.

     
  7.  
    TESCO 06:59: BBC Radio 4

    Ms Palmer of Begbies Traynor tells Today when Laurie McIlwee resigned in April "it was allegedly due to some certain differences of opinion" between former chief executive Philip Clarke and Laurie McIlwee. "So it could well be that this issue goes that far back."

     
  8.  
    ROCKEFELLERS GO GREEN 06:49:
    Oil well

    The Rockefellers - the US industrial family that made a fortune out of oil in the late 19th century, is going to sell its investments in fossil fuels and reinvent itself in clean energy, according to US press reports. Rockefeller Brothers Fund, founded by the family heirs, has signed a pledge to get rid of fossil fuel assets.

     
  9.  
    TESCO 06:42: BBC Radio 4

    More from retail analyst Julie Palmer on Tesco. She says there has been "some concern over a period of time that the Tesco board just hasn't been strong enough". Tesco relies a lot on non-executive directors, she adds. It's also not clear how long former chief financial officer Laurie McIlwee has been absent from the company following his resignation in April.

     
  10.  
    TESCO 06:38: BBC Radio 4

    It looks like Tesco has "recognised the acceleration of payments from suppliers for in-store promotions and bonus payments, while deferring costs relating to food that is out of date and stock theft", Julie Palmer of Begbies Traynor tells Today (whatever this means). But she says it's not clear if they have broken accounting rules.

     
  11.  
    LISTEN AGAIN Via Twitter Adam Parsons Business Correspondent
  12.  
    LABOUR CONFERENCE 06:24: Radio 5 live

    British Chambers of Commerce boss John Longworth says Ed Balls' speech at the Labour party conference yesterday marked a "paradigm shift" in Labour's approach to business. He tells Wake Up to Money a slew of policy plans including cuts to business rates, infrastructure plans and a decision on Heathrow expansion are all good news. Suggestions that Labour is anti-business, he says, are "behind the curve".

     
  13.  
    RATES RISE? 06:18: Radio 5 live

    The Bank of England should raise interest rates straight away according to Jim O'Neill, the economist and former chairman of Goldman Sachs Asset Management. He tells Wake Up to Money: "there's no reason not to move right now", and more "conventional" rates will be appropriate for the recovering economy.

     
  14.  
    BARCLAYS FINE 06:10:
    A Barclays sign hangs outside a branch of the bank in the City of London

    Ahead of its trading statement later this morning Barclays Bank appears to have found itself in some regulatory hot water again. the Financial Times reports the bank will later today be fined £38m for failing to keep client's money separate from its own at its investment arm. The fine, levied by the Financial Conduct Authority, would be a record for this type of misconduct.

     
  15.  
    TESCO IN SOUTH KOREA 06:03: Radio 5 live

    Tesco's troubles follow it to South Korea, the BBC's Steven Evans in Seoul tells Wake Up to Money. Regulators there have opened an investigation into Homeplus - a local Tesco subsidiary with 400 stores. Allegations include the selling of customer data, and the suggestion that a BMW car, meant as a customer lottery prize ended up in the hands of a friend of the staff - so not related to Tesco's current UK problems.

     
  16.  
    06:00: Edwin Lane Business reporter, BBC News

    There's also more on the Labour party conference, which continues today. Get in touch with us throughout the morning on bizlivepage@bbc.co.uk or on Twitter @BBCBusiness.

     
  17.  
    06:00: Matthew West Business Reporter

    Morning folks. This morning we have a trading update from Barclays bank as well as one from Punch Taverns. We also learned of 1,700 job losses at Phones 4U overnight. There are the latest set of public sector finances to examine later on. And there's bound to be more on Tesco's accounting irregularities. Stay with us.

     

Features

From BBC Capital

Programmes

  • TokyoThe Travel Show Watch

    Japan has a reputation for being expensive but can you visit without breaking the bank?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.