UK manufacturing faces pressure in 2016
British factory output growth has slipped unexpectedly to a four-month low in March Getty

British factory output growth has slipped unexpectedly to a four-month low in March after the strong run manufacturing has enjoyed since the Brexit vote lost momentum.

UK manufacturing production posted a 54.2 reading last month, compared to 54.5 in February, according to the closely-watched Markit/CIPS Purchasing Managers' Index. Economists had expected the figure to rise to 55.0.

The report noted that the rate of domestic new business wins and export growth slowed at the end of the first quarter of the year. However, it added that the overall industrial performance was "solid", with rates of expansion still above the long-run average.

IHS Markit senior economist Rob Dobson said: "The survey data suggests that the goods-producing sector made a solid contribution to gross domestic product during the opening quarter of 2017. However, it's clear that the expansion will be less than the buoyant 1.3% rise seen in the fourth quarter of last year."

He added: "The latest survey also clearly shows that high costs and weak wage growth are sapping the strength of consumers, with rates of expansion in output and new orders for these products slowing further."

Capital Economics economist Paul Hollingsworth said that even though UK manufacturing seems to have suffered "a modest slowdown", the sector was performing well by recent standards.

However, Hollingsworth added: "The quarterly average output balance now points, on the basis of past form, to quarterly growth in the official measure of manufacturing output of a bit below 1%, following a 1.2% rise in the fourth quarter.

"It suggests that growth lost some momentum over the course of the quarter, setting a low base for the second quarter of the year."

Rising inflation has led to income stagnating in real terms, with official data last week showing that British households were saving the smallest share of their income since records began more than 50 years ago.