What's going on?

Manufacturing in Britain is on a mini-tear, according to important survey data released on Thursday. It�s feeding into the idea that, so far at least, Brexit hasn�t been as bad for Britain�s economy as many had anticipated.

What does this mean?

The rebound in UK manufacturing � activity hit a 10-month high � was due, apparently, to companies restarting work in August that was postponed in July (i.e. in the immediate aftermath of the Brexit vote). In fact, the jump in activity from July to August was the biggest one-month jump in the survey�s 25-year history.

Why should I care?

For the markets: The value of the pound is rebounding somewhat.

Just as people don�t like to invest in struggling businesses, international investors tend not to like investing in countries that are going to struggle. So, when Britain voted to leave the European Union (EU), many investors sold the pound because they thought the UK�s economic growth would slow dramatically. As signs emerge that things might not be as bad as anticipated, the pound has increased in value (it�s up more than 3% since its mid-August low versus the US dollar).



The bigger picture: Political risk is unpredictable � and there�s a lot of it on the horizon.

Italy is holding a crucial referendum in a few months. The politics are complicated, but if the government loses the vote, it will likely be seen as �anti-EU.� Since Italy, unlike Britain, uses the Euro as its currency, the implications are potentially far greater. Next year, both Germany and France have national elections. Oh, and in the meantime, America will get a new President. The Brexit vote was just the beginning of a period of high political risk for markets�