Sterling extends this week’s strong rally as boosted by stronger than expected wage growth. Average weekly earnings including bonus rose 3.6% 3moy in July, up from 2.4% and beat expectation of 2.5%. Weekly earnings excluding bonus rose 2.9% 3moy, accelerated from 2.7% and beat expectation of 2.7%. Unemployment rate was unchanged at 4.0% as expected. In August, claimant count rose 8.7k, above expectation of 3.6k.

ONS statistician David Freeman said that “earnings have grown faster than prices for several months, especially looking at pay excluding bonuses”. Also, “the labour market remains robust, with the number of people working still at historically high levels,”

Full release here.

UK PMI Manufacturing rose to 49.6 in October, up from 48.3, and beat expectation of 48.0. While that’s below 50 neutral level, it’s still a 6-month high.

Rob Dobson, Director at IHS Markit, which compiles the survey:

“The manufacturing downturn continued at the start of the final quarter as uncertainties surrounding Brexit, the economic outlook and domestic politics all took their toll. However, the underlying picture looks even darker than even these disappointing headline numbers suggest, as output and new orders fell despite short term boosts from stock-building activity in advance of the October 31st Brexit deadline, which included a rise in exports as clients in the EU sought to mitigate supply risk.

“The high degree of uncertainty is hitting two areas of the manufacturing economy especially hard. The first is the trend in employment, as job losses resulting from disappointing sales are exacerbated by manufacturers implementing hiring freezes until the outlook clears. The second is the investment goods industry, where output and new orders are falling sharply as clients postpone capital spending plans.

“With a further Brexit extension confirmed and the prospect of a December general election, it looks as if the spectre of uncertainty will cast its shadow over manufacturing for the remainder of 2019.”

Full release here.

UK PMI manufacturing dropped to 52.8 in August, down from 53.8 and missed expectation of 53.9. That’s also the lowest level in 25 months. Markit noted that job creation slowed to “near-stagnation” and business optimism dipped to 22-month low.

Rob Dobson, Director at IHS Markit, which compiles the survey:

“The performance of the UK manufacturing sector looked increasingly lacklustre in August. The headline PMI fell to its lowest level for over two years, as growth of output and new orders slowed and the pace of job creation slumped to near-stagnation. Based on its historical relationship with official ONS data, the latest PMI report is broadly consistent with zero growth in manufacturing production, meaning the sector will likely fail to provide any support to the wider UK economy in the third quarter.

“Although slower growth of domestic demand contributed to manufacturing’s weak performance, the main constraint was the trend in new export business. Foreign demand declined for the first time since April 2016, despite the weakness of sterling, amid reports of slower global economic growth and the increasingly uncertain trading environment. Inflows of new work from both domestic and overseas sources will need to strengthen if manufacturing is to show renewed vigour in the coming months.

“Looking ahead, manufacturers’ optimism about the outlook for the year ahead has been receding in recent months and is now at a 22-month low. While a hoped-for improvement in new export order growth and new product launches are forecast to stimulate future expansion, manufacturers are also expressing rising concerns about the uncertain backdrop of Brexit.”