Britain's manufacturing sector suffered a slight but unexpected slowdown in November, as the weak pound drove up input costs, according to a survey by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) released on Thursday (1 December).
The Markit's Purchasing Managers' Index (PMI) fell from 54.3 in October to 53.4 in November, compared with analysts' expectations for an unchanged reading, but remained well above its long-run average of 51.5. While the figure was short of forecast and was also lower than the 27-month high reached in September, it marked the fourth consecutive month of expansion in the sector.
"Although the recent growth spurt showed further signs of slowing, the pace of expansion is still solid and above its long-term trend," said Rob Dobson, senior economist at IHS Markit.
"This should be sufficient to ensure manufacturing is a positive contributor to fourth quarter GDP."
Solid expansions of production and incoming new orders both remained solid last month, as companies reported domestic and export demand both continued to drive growth, as did new product launches, sales initiatives and efforts to clear backlogs of work.
However, the impact of the weak pound continued to be felt by in the sector, as average purchase prices rose at one of the fastest rates on record and close to October's six-year high.
Part of the increase in input costs was passed on to clients in the form of higher selling prices, as output charges rose for the seventh successive month, with the rate of increase one of the highest in the last five-and-a-half years.
Conversely, however, sterling's depreciation boosted exports and led to a further increase in new business from abroad, particularly from mainland Europe, the US and the Middle East.
"The concern is that higher costs may in time offset any positive effect of the weaker exchange rate, especially given that export order book growth has already waned markedly from September's five-and-a-half year high," Dobson added.