British manufacturing grew at its fastest rate in well over two years at the start of the third quarter, in a strengthening recovery that looks set to boost the economy, a survey showed today.
The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) jumped to 54.6 in July from an upwardly revised 52.9 in June, its fourth month of expansion in a row.
The reading was the strongest since March 2011 and trumped by a wide margin even the most optimistic forecast in a Reuters poll of economists.
Whether it proves lasting or not, British economic growth is accelerating, with gross domestic product rising 0.6%in the second quarter - double the pace of growth in the first.
The International Monetary Fund predicts a 0.9% expansion this year, up from a limp 0.2% in 2012.
Today's survey shows that demand for British wares grew both at home and abroad, including in the euro zone - Britain's main export market.
In addition, stocks of finished goods shrank at the sharpest rate in more than three years, boding well for production in the coming months, survey compiler Markit said.
Factories showed more appetite for hiring than at any point in the last two years, brightening the prospects for employment, an increasingly important gauge of the economy's health.
Economists say the Bank of England is likely to commit to keeping borrowing costs ultra-low until unemployment drops below a specific rate. The bank is due to announce its view on the merits of providing such a steer on interest rates on August 7, alongside its quarterly economic forecasts.
