U.K. Manufacturing Unexpectedly Expanded Casting Doubt On BoE’s Direction

Posted by admin on November 4th, 2009 at 09:30am

Swiss manufacturing activity slowed to 54.0 from 54.3 according to the SVME-PMI reading. Output and backlogged orders slipped leading to the indicator missing economists forecasts for an improvement to 54.8. Regardless, it was the third straight month that the sector expanded adding to signs that the recession is ending. A slight improvement in employment to 42.4 from 42.1 is a sign that optimism is growing.

U.K. manufacturing unexpectedly rose in October to 53.7 versus forecasts of 50, which was the fastest expansion in two years. The gauge for new orders surged from 52.7 to 59.5 which may be a signal that current growth is sustainable. The expansion in the manufacturing sector presents the BoE with a difficult decision. The central bank’s concerns over tight credit markets and its impact on consumer spending has increased speculation that they will add to their asset purchase program. However, if the economy continues to show signs of growth the threat of inflation may give policy makers a second thought.

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