The purchasing managers’ index for August showed the highest rate of increase for 25 years, after a weak pound significantly boosted exports. Following a drop in July to 48.3, a 41 month low, the figure rose to 53.3. The PMI is widely regarded as one of the best barometers of economic activity. A figure above 50 indicates expansion (Investment Adviser).

The latest figures suggest that managers are adopting a far more confident approach to spending and investments but remainers are likely to suggest that a great deal of the increase will be owing to inventories being replenished.

The pound rose sharply following the release of the survey, rising 0.9 per cent against the euro to a one-month high and the pound is up 0.7 per cent against the dollar.

Neil Wilson, market analyst at ETX Capital, said: “We’re seeing a strong bid for sterling after a stonking manufacturing PMI showed the UK’s factories sparked back into life in August following the July post-Brexit slowdown.”

August employment data showed shifted above the 50 mark for the first time since December last year, driven by a rise in hiring from smaller-sized companies (Investment Adviser).

Domestic clients submitted more orders from clients but the leading factor was weakness in sterling creating a competitive environment for exporters. The month-on-month jump in new orders and output overall was also among the highest on record and suggests that domestic demand has showed a marked recovery.

Rob Dobson, senior economist at IHS Markit, which conducts the survey, said: “Companies reported that work that had been postponed during July had now been restarted, as manufacturers and their clients started to regain a sense of returning to business as usual.”

He added: “It is too early to say whether the rebounds in growth and inflation will be sustained, but the upturn in August suggests that the weaker exchange rate and recent policy action have helped to avert a downturn.”

The survey marks a turnaround from July’s slump and policymakers will be watching closely to see if there is a similar rebound in the UK’s dominant services sector.

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