British manufacturing growth eased further in August to its lowest level in 14 months as output and demand increased at slower rates, survey results from Markit Economics showed Monday.
The Markit/CIPS Purchasing Managers' Index dropped to 52.5 from a revised 54.8 in July. Economists had expected the score to fall to 55.1 from July's original figure of 55.4. The latest PMI reading was the lowest since June last year.
"Sustaining the upturn is nonetheless still a positive in itself, and it should be noted that the pace of expansion remains solid and a touch above its long-run average," Markit Senior Economist Rob Dobson said.
"However, it is also becoming increasingly evident that UK industry is not immune to the impacts of rising geopolitical and global market uncertainty, especially when they affect economic growth and business confidence in our largest trading partner the eurozone."
Output and new orders growth slowed even as the expansion trend was extended to one-and-a-half years. Both domestic and exports orders increased.
Production and new business improved across the board, yet signs of a slowdown have become increasingly evident in recent months, the survey said. Growth rates also eased in all product categories.
Export demand increased for the seventeenth month, but was the slowest since March. Demand was mainly driven by improvement in orders from clients in the USA, Canada, Asia and the Middle East.
Jobs were created for the sixteenth straight month, but the rate of increase slowed to a 14-month low. While small and medium enterprises hired staff, large-scale producers trimmed jobs.
The level of work-in-hand contracted for the sixth month helped by higher production, employment growth and settling of existing inventories. Finished goods stocks fell at the fastest rate since November 2013.
Input price inflation hit a seven-month peak, but was low by historical standards of the survey. Output prices logged a modest increase, the slowest in three months.
"It therefore looks as if manufacturing will provide a lesser contribution to the UK economic growth story in the third quarter than at the start of the year," Dobson said.
"With the market's focus firmly on the Bank of England for any signal on the timing of the expected move in interest rates, the MPC will likewise keep a watchful eye on the other sectors of the economy for signs they can offset the slowdown in manufacturing."
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