The UK manufacturing sector remained in ‘expansionary’ territory for a fifth month running in September with a reading of 51.5 on the S&P Global UK PMI (purchasing managers’ index).

A figure above 50 indicates an expansion in activity while a figure below 50 represents a contraction.

Both output and new orders continued to rise, particularly in consumer and intermediate goods, with the domestic economy is still the main driver of growth according to the survey.

It was a much less rosy picture across the Channel where the September HCOB Eurozone Manufacturing PMI came in at a disappointing 45, falling from 45.8 in August and marking a nine-month low.

The euro area’s manufacturing sector slid deeper into contraction at the end of the third quarter as key barometers of factory strength such as production, new orders, employment and procurement activity all declined at quicker rates, said the survey.

Eurozone goods producers also lowered their inventories as business growth expectations slumped to a ten-month low.

However, Eurozone headline inflation did drop below 2% in September, falling to 1.8% as per market forecasts, its lowest level in three years.

In theory, that means the ECB (European Central Bank) has scope to cut interest rates at least once more before the end of the year in an effort to revamp the flagging economy.

In the US, given the Fed’s repeated mantra about being data-centric, this week’s focus is very much on the jobs market with the JOLTS survey on Tuesday, the ADP non-farm number on Wednesday and the big one, the Bureau of Labour Statistics non-farm payrolls figure, on Friday.

Next week’s economic diary is light but investors will certainly be keeping an eye out for UK house prices and retail sales figures for signs of how the consumer is feeling now the interest rate cycle has peaked.

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