More evidence the UK economy is gaining momentum as manufacturing grows at its strongest pace in almost three years. David Tinsley, Chief UK Economist at BNP Paribas, says it was a surprise to see the Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) jump to 58.4 in November, but investors should beware that the global picture is not as strong as the domestic picture, and to expect a retracement towards the mid-55 PMI later next year.

SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (DECEMBER 2, 2013)

1. BNP PARIBAS UK CHIEF ECONOMIST, DAVID TINSLEY, SAYING:

JOURNALIST ASKING DAVID TINSLEY: 'Hi there, David. Services, yes, with consumer confidence and the housing market, but manufacturing?'

DAVID TINSLEY: 'Yeah, it's something of a surprise. It's doing quite as well as it is, I must confess. I mean I wouldn't be surprised to see a PMI in the sort of 55 region or so. That would be similar to, say, the States or some of the Scandis. But to be up at 58.5 or so, it is amazing really.'

JOURNALIST: 'And what is driving it and what do we need to worry about?'

DAVID TINSLEY: 'Well I think part of what's driving it is what's driving the service sector. So this is still a part of a return to UK domestic consumer confidence. The FLS data out today was underlining the fact that credit conditions have eased really for SMEs and larger firms as well and that's probably helping as well. What we probably need to be worried about is the fact that the global picture is not as strong as the domestic picture and at the same time, the UK currency is appreciating albeit modestly but it is appreciating. And so I would imagine we will see some retracement of these high levels back towards the sort of mid-55s in the PMI later this year - later next year, I should say.'

JOURNALIST: 'I don't want to rain on Osborne's parade but you mentioned Sterling and the appreciation albeit a slow one. How long before that puts a cap on this, do you think?'

DAVID TINSLEY: 'Well normally speaking, we reckon a tightening of financial conditions such as depreciation of the Pound has about a six-month lag. So that's been going on for a little while. So I would foresee a good Q4 GDP print, for example, and probably a good Q1 GDP print but we might start to see some cooling then around Easter into the second half of the next year.'

JOURNALIST: 'No doubt, Carney will be watching this employment sub-index. 5,000 jobs created a month. It's at a three-year high. Does it put him - I mean look, we've talked about his quandary vis-a-vis the unemployment rate for a few months now. But does it weigh a little bit more on him, this?'

DAVID TINSLEY: 'Well what you're getting at the moment really is even better activity than many people were penciling in and alongside that you are seeing some improvement in employment. But in some respects, the difference between those, productivity is developing much like the bank would expect. So they're not worried about any of that, but at the margin, it potentially brings forward the day when you have to raise rates.'

JOURNALIST: 'Where's the gilt yield going?'

DAVID TINSLEY: 'It's a bit firmer today. I think on the back of that stronger data, the FLS and the PMI, and we would imagine it will go higher over the course of the next year or so. I mean if you look at gilt/Bund spread, for example, it's still a little bit below sort of 10-year highs and there's no reason given the outperformance of the UK for it not to push through beyond that.'

JOURNALIST: 'Alright. Just - whilst we got you as well, I see a report today, UK bank lending stronger in Q3. I mean it actually looks pretty good. Banks and building societies taking part in the funding for lending scheme, GBP5.8 billion in Q3, more than three times the level of the previous quarter and that message seems to be getting through. Are those numbers that we can build on?'

DAVID TINSLEY: 'I suspect there'll be some continued momentum in the housing market. I mean clearly, they've taken a few measures really only at the edges though at the moment, to ease back on that via ending the FLS for household lending in 2014. But the Help to Buy scheme is kicking in strongly at the moment. So that's going to give us probably six months of really quite good data there.'