UK rate rise on the cards

LONDON - An increase in UK interest rates this week is a "very real threat" after a snapshot survey of British manufacturers showed that they enjoyed an unexpected surge in business last month, analysts said.

Manufacturing output jumped to its highest level for more than two years in September, according to a poll of more than 600 factory managers.

The volume of new orders accelerated as a fall in sales abroad in August reversed direction, while firms managed to raise their prices for the 14th month running.

Output jumped to 58.7 from 54.2, making it the fastest growth since 2004, while new orders and exports also posted robust increases.

"These data all suggest that the threat of another rate hike this week is very real," said James Knightley, UK economist at ING Financial Markets.

The vast majority of City economists believe the bank's Monetary Policy Committee will raise rates to 5 per cent in November, a month that coincides with its quarterly upgrade to inflation forecasts.

- INDEPENDENT