Growth slowed in the UK’s manufacturing sector in August.

The UK manufacturing PMI fell to 51.5 in the month, down from 51.9 in July. Any score above 50 indicates growth.

This is”well below” the average over the past two-and-a-half years, compiler Markit said.

After 2 years of continued job creation, August saw a reduction in new jobs in the sector.

“The UK manufacturing sector remains in a holding pattern, with production growth hovering around the stagnation mark and marginal job losses reported for the first time in 26 months,” said Rob Dobson from Markit.

“Export order volumes continue to disappoint, with the sterling exchange rate, weak sales growth to the eurozone and the slowdown in China all having an impact.”

 

Strong Sterling

Analysts suggested the weakness in exports as a problem for manufacturing in the UK.

“The survey indicates that UK manufacturers are continuing to find life very challenging as they are being held back, particularly by weak foreign orders,” said Howard Archer from IHS Global Insight.

“In particular, sterling’s strength – particularly against the euro – is seemingly constraining UK manufacturers.”

On a more positive note, the survey found a “substantial drop” in input prices, which fell at “one of the steepest rates” seen in the past sixteen years. This was down to lower oil and raw material prices, as well as a strong pound, which makes exports more expensive but imports cheaper.

The pound dropped immediately after the figures were announced, as markets bet that the weaker figures would push back the timing of any interest rate rise by the Bank of England.