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Why good news is bad news for Carney
Encouraging manufacturing figures from both the UK and Germany makes for mixed reading for central bank Governor Mark Carney. That’s according to Saxo Bank’s Nick Beecroft, because Carney has stressed the economy needs a lot more help from the central bank's record-low interest rates before it is back to health.
But with figures like these ones, he will struggle to convince investors that he should keep rates low for long.
The UK Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) jumped to its fifth straight month of expansion and an 18-month high. New orders and output rose at their fastest pace in nearly 20 years.
Meanwhile, German manufacturing grew at the fastest pace in two years in August thanks to robust demand at home and abroad.
The Bank of England will announce its latest rates decision on Thursday, as will the ECB. The BoE has said it would keep interest rates at a record 0.5 per cent until unemployment falls to 7 per cent, something the bank only expects in late 2016.
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