Aug 1 Reuters British factories recorded their best month for two years during July, with output and hiring rising and optimism building after Prime Minister Keir Starmer39;s landslide election victory, a survey showed on Thursday.

The SP Global UK Manufacturing Purchasing Managers39; Index rose to 52.1 from 50.9, its highest reading since July 2022 and up from a preliminary flash reading of 51.8.

Output and new orders increased at the fastest rate since February 2022, while manufacturers added staff for the first time in 22 months.

Other business surveys such as one published by Lloyds on Thursday have shown a similar boost to business sentiment following the July 4 election result, which delivered a big majority for the Labour Party. Strengthening cost pressures marred an otherwise positive picture, with the survey39;s gauges of both input and output prices reaching their highest levels since the first half of 2023.

The Bank of England which is monitoring price pressures in the economy is due to announce its interest rate decision for August at 1100 GMT. Economists think it is likely to cut borrowing costs for the first time since 2020 and markets see a roughly 65 chance of a quarterpoint cut.

UK manufacturing has started the second half of 2024 on an encouragingly solid footing, said Rob Dobson, director at SP Global Market Intelligence.

Inflationary pressures remain a blot on the copybook, Dobson added, citing the ongoing Red Sea crisis and freight issues….