New figures show that the UK's manufacturing sector is growing at its fastest rate since March 2011, as Markit's purchasing manager's index (PMI) rises to 54.6.
That's well ahead of expectations of a rise from 52.5 to 52.8. The pound rose sharply by nearly a cent against the dollar to more than $1.52 on the news.
New orders expansion has accelerated to hit a February 2011 high. Markit said that the upturn was led by "strong and accelerated growth of output and new orders in the consumer goods sector".
Rob Dobson, senior economist at survey compilers Markit:
The sector looks to be building on the foundation of the second quarter’s 0.4% return to growth reported by the latest official data, with the July PMI survey also showing an improvement in forward-looking indicators.
Jeremy Cook, chief economist at the foreign exchange broker, World First, said:
New orders have risen to their highest level since February 2011 and the encouraging sign is that export business to key areas away from the Eurozone, i.e. China, the US and the Middle East, has improved too.
The strong new orders component will allow us to keep a bullish tilt towards the UK’s manufacturing sector over the coming months, something that should see manufacturing employment move higher through Q3 as well.