British manufacturing growth recovered in July from a seven-month low, helped by the biggest influx of new export orders since 2010, according to a survey

that may ease slowdown concerns among Bank of England officials meeting this week.

Tuesday’s Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose to 55.1 from a downwardly revised 54.2 in June, exceeding the 54.4 consensus in a Reuters poll of economists.

Although the survey showed growth in manufacturing output cooled to a four-month low, new orders strengthened – particularly from abroad.

The PMI’s new export subindex surged more than 5 points to 58.2 in July, within touching distance of the all-time high hit in April 2010.

That ought to hearten BoE policymakers ahead of Thursday’s interest rate announcement, as should signs that price pressures are now fading, offering relief to households.

The survey’s gauge of factory cost pressures fell for the sixth straight month to reach its lowest level since June last year, when Britain voted to leave the European Union.

“UK manufacturing started the third quarter on a solid footing,” said Rob Dobson, economist at PMI compiler IHS Markit.

“If this trend of milder price pressures is also reflected in other areas of the UK economy, this should provide the Bank of England sufficient leeway to maintain its current supportive

stance until the medium-term outlook for economic growth becomes

less uncertain.”

Only two out of 80 economists polled by Reuters think the

BoE will raise its main interest rate on Thursday from a

record-low 0.25 percent.

Still, the PMI’s improvement in exports coupled with signs

of solid employment growth might help to convince the minority

of policymakers who voted in June for higher rates to stick with

their call.

The increase in manufacturing activity was driven by

consumer goods producers in July, IHS Markit said. Growth in the

investment and intermediate goods sectors hit its lowest in

eight and five months respectively.

Export demand was broad-based, with more orders from North

America, Europe, east Asia and the Middle East.

Indicators of growth in Britain’s economy have been fairly

mixed. A Confederation of British Industry survey last week also

pointed to strong manufacturing exports, although this has yet

to be borne out in official data. (Full Story)

Consumer morale has waned this year as households become

squeezed increasingly by higher inflation and subdued wage

growth.

A YouGov/Cebr survey earlier on Tuesday showed consumer

confidence stabilised last month after hitting its lowest level

since just after the Brexit vote.

But of more importance for BoE rate-setters will be

Thursday’s PMI for the services industry, which drives the bulk

of British economic output.