Pound soars to six-year high as manufacturers power up

Manufacturing surged at its fastest pace in seven months in June, according to the latest survey snapshot of the sector, sending sterling to a six-year high against the dollar.

The Markit/CIPS index of activity shot up to 57.5 in the month, from 57 in May, and well above the 50 mark that separates growth from contraction.

The reading, the strongest since November, surprised economists who had anticipated a slight fall in the index.

After its release the pound jumped to $1.7136, its highest level since October 2008. Against the euro sterling leapt by almost a third of a cent to €1.2513.

“UK manufacturing continued to flourish in June, rounding off one of the best quarters for the sector over the past two decades,” said Rob Dobson of Markit.

“We’ve seen a big focus on new product and service innovation across industry over recent years and this survey provides a bit more evidence that this is paying off with companies securing new business off the back of it,” said Lee Hopley of EEF, the manufacturers’ organisation.

However, the Office for National Statistics also confirmed today that productivity, as measured by output per hour worked, declined by 0.1% in the first quarter of 2014.