Despite a positive outlook and continued growth for United Kingdom manufacturing, cost pressures continue to build. Selling price inflation is now at the highest level for six months and input costs are rising at the fastest for seven months. As such, eyes will now be firmly fixed on the Bank of England's interest rate decision, with a hike likely to impact investment decisions in the United Kingdom, as well as have potential implications for overseas demand.
The headline Nikkei Malaysia Manufacturing Purchasing Managers' Index (PMI) saw the sharpest drop in three months to 48.6 in October from 49.9 in September, due to lower new business volume.
On the price front, input cost pressures rose to the fastest since May.
Activity in Britain's manufacturing industry rose in October, as domestic demand drove a raft of new contracts and the weak pound help deliver further growth in export orders. Any reading above 50 indicates expansion in the sector.
The survey also showed that the pace of job growth was as its highest level in 40 months, as over 50% of manufacturers forecast that output growth would be higher in one year's time.
Meanwhile, new export orders fell for the second consecutive month.
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Markit reported that the October manufacturing expansion was broad based, with growth from consumer, intermediate and investment goods producers. Governor Mark Carney has warned of a supply squeeze related to Brexit that will reduce potential growth and increase the risk of the economy overheating.
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.
"Inflows of new orders stagnated as the negative effects arising from the implementation of GST continued to dampen demand levels", Aashna Dodhia, an economist at IHS Markit, told Reuters. "Further, overseas demand for Indian goods dipped to the greatest extent since September 2013".
Business confidence eased to the weakest since February as some firms expressed concerns over negative GST effects.
Firms remained optimistic that output will rise over the coming 12 months, linked to predictions of improving market demand and meeting of company targets.