Foreign demand for UK goods sees fastest rise since 2010

The closely watched Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 55.1 last month, up from 54.2 in June and higher than expected.

A reading above 50 indicates growth.

The pound jumped to a fresh 10-month high against the US dollar after the report, which said foreign demand for UK manufacturing output rose at the fastest pace since April 2010.

It was also the second-strongest rate in the history of the survey as the Brexit-hit pound has boosted overseas demand for British-made goods and services.

Sterling lifted 0.2% to 1.32 US dollars and 0.4% to 1.12 euros.

The reading marked the first pick-up in growth for three months and offered some cheer for the wider economy.

Rob Dobson, director at report compiler IHS Markit, said the manufacturing sector had kicked off the third quarter on a “solid footing”.

He said: “Although the exchange rate remains a key driver of export growth, manufacturers also benefited from stronger economic growth in key markets in the euro area, North America and Asia-Pacific regions.

“Continued expansion is also still filtering through to the labour market, with the latest round of manufacturing job creation among the best seen over the past three years. “

The report also said pricing pressures eased further for manufacturers, with input prices rising at their weakest pace in over a year.

This gives hope that soaring UK inflation may begin to wane, relieving pressure on cash-strapped consumers.

It comes ahead of the Bank of England’s interest rates decision on Thursday, with speculation over whether policymakers will vote for a rise to offset surging inflation.