UK manufacturing smashes expectations, PMI rises to 30-month high in Dec

UK manufacturing sector ended 2016 on a positive note. The seasonally adjusted Markit/CIPS Purchasing Managers’ Index (PMI) rose to a 30-month high of 56.1 in December, up from 53.6 in November and well above its long-run average (51.5). Data exceeded all forecasts in a Reuters poll, which pointed to a decline to 53.1.

Improved domestic and overseas demand boosts output and new order growth. New export business rose for the seventh successive month in December. Improved inflows of new business led to a slight increase in backlogs of work in December, the first rise since February 2014.

Employment rose for the fifth consecutive month in December, with the pace of jobs growth accelerating to the fastest in 14 months. Price pressures remained elevated in December. Rates of inflation for input costs and output charges both remained among the fastest seen on record.

FTSE 100 broke the 7,200 mark, to hit an all time record high of 7,205.21. The index pared some gains, dipped back below 7,200 after uptick in the pound. Cable surged from lows of 1.2246 to 1.23 levels after the data.