Economy close to ‘escape velocity’ mode

The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) jumped to 54.6 in July from an upwardly revised 52.9 in June, its fourth straight month of expansion.

The reading was the strongest since March 2011 and trumped by a wide margin even the most optimistic forecast in a Reuters poll of economists, triggering a rise in the pound and a fall in the prices of safe-haven British government bonds.

The latest sign that Britain’s economy is edging closer to sustainable growth – termed “escape velocity” by the Bank of England’s new governor, Mark Carney – fed into yesterday’s discussions at the central bank.

Brian Hilliard, economist at Societe Generale, noted the fastest rises in new orders and output since February 2011, at 58.2 and 58.0 respectively.