Domestic demand leads to further manufacturing growth in October

BOE Needs Messaging With a Rate Hike Says UBS's Yu

Alongside production growth at an eight-month high, new business orders rose at their fastest pace since March, IHS Markit said, while demand from overseas clients was described as "substantial".

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.

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.

On the prices front, the survey compiler said inflationary pressures continued to be "marked" last month, amid "solid" rate increases in output prices - which rose by their quickest since April - even as input costs increased at a "softer" pace than in September. A score above 50 points indicates an overall improvement of the sector.

Closely-watched figures from the IHS Markit/CIPS manufacturing purchasing managers' index (PMI) showed the sector enjoyed a brisk start to the fourth quarter.

"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". The headline PMI has now signaled expansion for 15 consecutive 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.

Finally, the level of positive sentiment among manufacturers towards output growth eased to the weakest since February.

Dodhia said the recent recovery in the manufacturing sector lost impetus in October. Production increased at a marginal pace that was the weakest in the current 12-month sequence of expansion.

IHS Markit, which compiles the survey, said survey respondents associated the fall in new orders to subdued demand conditions.

On the bright side, the labor market continued to improve, with manufacturers further increasing their staffing levels, and at a pace similar to September's 59-month high.

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