British manufacturing activity growth eased more than expected in October to its slowest rate this year, a survey showed today.
The Chartered Institute of Purchasing and Supply (CIPS)/NTC said its manufacturing purchasing managers' index fell to 52.9 last month from 54.7 - the lowest since last December and below a mid-range estimate of 54.4.
Sterling fell to session lows against the dollar, and interest rate futures trimmed losses after the figures, which indicate tighter lending conditions are forcing companies to rein in spending.
It also suggests the global credit squeeze triggered in August by defaults on US mortgage debt may hit growth.
CIPS/NTC blamed the moderation in export orders growth on a slowdown in the US and European economies and on the weaker dollar. The pound hit a new 26-year high against the dollar this week.
Today's survey may reignite some market speculation for a near-term cut in UK interest rates. But recent comments from policymakers suggest the Bank of England is in no hurry to lower borrowing costs from their current 5.75 per cent.