FTSE 100 set for biggest weekly rise since 2011 in Brexit rebound

Britain’s manufacturers had an unexpected spurt of growth ahead of the EU vote, expanding in June at their fastest rate in five months.

The news helped to push the stock market to a 10-month high, rising for the fourth consecutive day, with the FTSE 100 up 22.55 points at 6526.88, well above its level before the Brexit results.

The blue-chip index was on course to record its biggest weekly rise since 2011 with a gain of 6.3%, after Bank of England Governor Mark Carney made a pledge to stimulate the economy if needed. The pound also continued to recover, rising another half cent to $1.3308, but is still more than 10% down on its immediate pre-poll highs.

The UK manufacturing PMI compiled by Markit/Cips jumped from 50.4 in May to 52.1 in June when economists had been expecting it to show little change. But Markit warned that “almost all the data” it had collected from manufacturers had been received before the June 23 vote.

“With 99% of survey responses received before the end of June 23, the latest PMI signalled that the manufacturing sector has started to move out of its early-year sluggishness in the lead up to the UK’s EU referendum,” said Markit economist Rob Dobson, adding: “Whether this growth recovery can be sustained will depend heavily on whether financial and political volatility spills over to the real economy.”

Most economists now believe that the UK is likely to fall into recession in the wake of the Brexit decision.

“The sharp weakening of the pound will provide some help to UK exporters competing in foreign markets,” said Howard Archer of IHS Economics. “But this will be at least partially offset if there is a significant hit to European growth from the Brexit vote.”

European manufacturing growth was also better than expected with the PMI for June coming in at 52.8 from May’s 51.5 and the strongest so far this year. Anything above 50 indicates growth.