Britain's manufacturing sector expanded at the fastest pace in 10 months in August, according to a survey by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) released on Thursday (1 September).
The Markit's Purchasing Managers' Index (PMI) climbed from 48.3 in July, the lowest level in almost two years, to 53.3 in August, comfortably beating expectations for a 49 reading and reaching the highest level in 10 months.
The month-on-month increase in the level of the headline PMI was the joint-greatest in the near 25-year survey history, Markit said, adding the gains in the indices tracking output and new orders were also among the sharpest on record.
After declining in July, manufacturing production rose at the fastest pace in seven months during August, and all three of the market groups covered by the survey returned to growth, with the strongest expansion registered in the consumer goods sector.
New business grew at one of the quickest rates in the year so far, as companies benefited from strong demand on both the domestic and international front, while companies reported that work that had been postponed during July resumed, as manufacturers and their clients started to regain a sense of returning to business as usual.
"The domestic market showed a marked recovery, especially for consumer products, while the recent depreciation of sterling drove higher inflows of new business from the USA, Europe, Scandinavia, Middle East and Asia," said Rob Dobson, senior economist at IHS Markit.
However, he warned that inflation could dent progress in the sector, as increase in input prices and output charges both hit five-year highs, due to the impact of sterling on import prices.
"It is too early to say whether the rebounds in growth and inflation will be sustained, but the upturn in August suggests that the weaker exchange rate and recent policy action have helped to avert a downturn," Dobson added.