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The manufacturing sector activity in the UK economy unexpectedly saw an upturn in the month of September, surprising markets to the upside, the latest data from Markit showed on Monday.

The manufacturing Purchasing Managers’ Index (PMI) in the UK arrived at 53.8 points in September, as compared to a previous 52.8 reading. Markets had predicted the PMI to tick down to 52.5.

Key Points:                                

Output and new order growth both accelerate.

Input cost and output charge inflation strengthen.

Rob Dobson of Markit commented in the release, “September saw a mild improvement in the performance of the UK manufacturing sector. Domestic market demand strengthened, while increased orders from North America and Europe helped new export business stage a modest recovery from August’s contraction. Business confidence also rose to a three month high.”

“Despite these causes for short-term optimism, conditions in manufacturing are still relatively lacklustre overall. Based on its historical relationship with official ONS data, the latest survey is consistent with output expanding at only a moderate pace. Although total exports rose, exports of goods used as inputs by other manufacturers fell for the third straight month, ending the worst quarter for over three years for such exporters, suggesting that foreign companies may be sourcing less from UK-based component suppliers.”