UK factories have experienced their fastest monthly growth in two years, signaling an uptick in the economy following last month’s general election. Data from S&P Global shows that UK manufacturing recovery strengthened in July, with output and new orders increasing and the first rise in workforce levels since September 2022. Production volumes in consumer, intermediate, and investment goods industries all saw an increase, leading to the UK Manufacturing Purchasing Managers’ Index reaching a two-year high of 52.1 in July.
Business confidence also rose, with positive sentiment nearing a two-and-a-half-year high. Rob Dobson, director at S&P Global Market Intelligence, credits the sector’s growth to falling political uncertainty. The report also noted that 60% of companies surveyed forecasted an increase in output over the next 12 months, and there were signs of stabilization in new export business after a period of decline.
In contrast, the eurozone’s factory sector continued to shrink in July, with manufacturers facing weak demand, a drop in new orders, and rising costs. This is in stark contrast to the positive momentum seen in the UK manufacturing sector.
The Bank of England is expected to potentially cut interest rates, with bond prices strengthening in anticipation of this decision. While there may not be unanimous agreement among the monetary policy committee members, there is speculation that a rate cut may be imminent to support economic growth.
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