UK's seasonally adjusted purchasing managers' index rose to a two-year high in October, boosted by a rise in output and new orders, the latest survey from Markit Economics and Chartered Institute of Purchasing & Supply said Monday.

The PMI rose to 53.7 from a revised 49.9 in September, the highest since November 2007, and the third highest in the history of the series. A reading above 50 indicates expansion, while a reading below 50 signals a contraction.

Output rose to its highest level in two years, as new orders hit a 69-month peak. Looking ahead, the new orders-to-stocks of finished goods ratio, an indicator of future production, rose to its highest level since data were first collected in January 1992.

However, staffing fell for the 18th consecutive month, as companies introduced cost cutting measures, but the rate of fall was the slowest since January 2008.

Average purchasing costs increased for the second month running, and at the fastest pace since September 2008, mainly due to higher commodity prices. Average vendor performance fell at the fastest pace since March 2008. At the same time, output prices fell further, but at a slower pace.

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