Investing.com - Manufacturing activity in the U.K. registered an unexpected increase in December, hitting a 30-month high and bolstering confidence over the British economy, industry data showed on Tuesday.
In a report, market research group Markit said that its U.K. manufacturing PMI jumped to a seasonally adjusted 56.1 last month from a reading of 53.6 in November, that was revised from an initial 53.4.
Analysts had expected the index to slip to 53.3 in December.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Markit pointed out that improved domestic and overseas demand boosted output and new order growth.
The research group further indicated that price pressures stayed elevated, though they eased further from recent highs.
“The UK manufacturing sector starts 2017 on a strong footing,” Rob Dobson, senior economist at survey compiler Markit, said.
“The headline PMI hit a two-and-a-half year high in December, with rates of expansion in output and new orders among the fastest seen during the survey’s 25-year history,” he added.
Dobson said the data signaled quarterly growth of 1.5% which he considered to be “a surprisingly robust pace given the lackluster start to the year and the uncertainty surrounding the EU referendum.”
This expert also noted that rates of inflation remained among the highest levels seen during the survey’s history.
“Of the companies citing a cause of higher costs, 75% linked the increase to the exchange rate,” he explained.
Following the report, the pound jumped to almost two-week highs against the euro following the report, with EUR/GBP down 0.63% to 0.8460.