India's manufacturing PMI eases at 50.3 in Oct'17

Gladys Abbott
November 2, 2017

British factories have reported a large boost in new orders from domestic customers but growing price pressures have added to the chances that the Bank of England will raise interest rates tomorrow.

With a PMI above 50 signalling growth, the manufacturing sector has been on the rise for 15 months in a row, according to Markit's figures. This indicated a broad stagnation in the health of the manufacturing sector during October.

"Meanwhile, the output expectations balance - which offers the best correlation with the official data - was unchanged at 56.6, remaining consistent with quarterly manufacturing output growth of around 1%, the same pace as that recorded in Q3". Firms associated a rise in employment with greater outstanding business.

"We expect the Markit/CIPS Manufacturing PMI to post a slight monthly decline in October. Disappointingly, manufacturing production rose at the weakest pace in the current sequence of growth", said Aashna Dodhia, an economist at IHS Markit.

Indian consumer inflation held steady at 3.28 percent in September, but is expected to accelerate over coming months led by higher petrol and diesel prices, complicating the task of the Reserve Bank of India as it seeks to stimulate the economy with more rate cuts.

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There was further jobs creation, with the pace of growth hitting the highest in 40 months.

Firms also continued to face higher input costs as the inflation rate remained sharp overall, but eased from the prior month.

"In response to weakening business conditions, the manufacturing sector decreased payroll numbers for the first time in four months, and at the greatest extent since August 2016".

United Kingdom manufacturing activity and input prices both increased more than expected in October, a survey revealed on Wednesday, which was felt likely to increase the Bank of England's confidence about raising interest rates and its concerns about inflation. "However, those manufacturers that were optimistic forecasted benefits of GST materialising over the next 12 months". "There was further evidence of material shortage impacting the sector, leading to higher input costs and delivery delays", Andrew Harker, associate director at IHS Markit, said. "IHS Markit is now forecasting a rise of 6.5 per cent", he said.

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