Investing.com - Manufacturing activity in the U.K. expanded at the fastest rate in three months in January, due mostly to improved domestic demand, industry data showed on Monday.
In a report, market research group Markit said that its U.K. manufacturing PMI rose to a seasonally adjusted 52.9 last month from a reading of 52.1 in December. Analysts had expected the index to inch down to 51.8 in January.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Manufacturing production increased again during January, reflecting improved inflows of new work from the domestic market. Moreover, the rate of expansion in output accelerated to a 19-month high. The trend in new export orders, however, fell back into decline.
Companies linked lower overseas sales to stronger competition and tough market conditions. Some firms also noted that, despite recent easing, the sterling-euro exchange rate remained an issue impacting on trade flows with the euro zone.
Meanwhile, the ongoing weakness in global commodity prices led to a further substantial reduction in manufacturers’ average purchasing costs during January.
Commenting on the report, Rob Dobson, senior economist at survey compiler Markit, said, “Subdued growth, rising global headwinds and a lack of inflationary pressure provide further cause for the Bank of England to push its first rate increase into the back and beyond of 2016.”
GBP/USD was trading at 1.4305 from around 1.4304 ahead of the release of the data, while EUR/GBP was at 0.7580 from 0.7588 earlier.
Meanwhile, European stock markets were modestly lower. London’s FTSE 100 dropped 0.4%, the EURO STOXX 50 declined 0.1%, France's CAC 40 slumped 0.5%, while Germany's DAX slipped 0.45%.