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U.K. Manufacturing Surges as Euro-Area Recovery Builds: Economy

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U.K. Manufacturing Surges as Euro-Area Recovery Builds: Economy

A U.K. factory index increased to a 2 1/2-year high in August, while a pickup in Italy and Spain helped euro-area manufacturing expand faster than initially estimated, evidence the region’s recovery is building momentum.

The British gauge climbed to 57.2 from 54.8 in July, Markit Economics said today in London. That’s above the 50 level signaling growth. Markit’s euro-area factory measure rose to 51.4 from 50.3 in July, it said, above an estimate of 51.3 published on Aug. 22. Two indexes of manufacturing in China also rose in August.

Strengthening global factory activity is helping exports and the U.K. improvement suggests the economy picked up momentum into the third quarter after gross domestic product grew 0.7 percent in the previous period. The Bank of England will probably keep policy unchanged this week amid growing investor doubts that Governor Mark Carney and officials can keep the benchmark interest rate at a record low for three years.

“Third-quarter GDP growth looks set to improve on the 0.7 percent rate recorded in the second quarter, with the orders figures suggesting this momentum will be carried through into the fourth quarter,” said James Knightley, an economist at ING Bank NV in London. “We struggle to see bank rate remaining at 0.5 percent for the next three years.”

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