Rising oil costs hit growth figures
The Markit/CIPS survey, where a reading above 50 represents growth, showed the sector grew at 51.2, down from 52 the previous month and weaker than City expectations of 52.1.
Rising oil prices, which have been driven as high as 109 US dollars a barrel in recent week amid tensions over Iran's nuclear programme, pushed up the cost of chemicals, metals, plastic and transport for businesses.
The rising prices threaten to derail the sector's recent rebound amid signs that new work from domestic and overseas clients stagnated.
Rob Dobson, senior economist at Markit, said: "The latest PMI survey brought the headwinds faced by manufacturers into sharper focus. Cost inflation also resurfaced, picking up sharply on the back of high oil prices and associated increases in the costs of chemicals, energy and transportation.
"If this combination of rising costs and weak demand persists, sustaining output growth and job creation will become increasingly difficult."
The prices manufacturers charge for their goods rose at the quickest pace for five months. But this was not as fast as the rise in input costs, suggesting that their profit margins are in danger of being squeezed as they struggle to hike prices amid weak demand.
The manufacturing sector declined in the final quarter of 2011, dealing a blow to Chancellor George Osborne's plans to rebalance the economy through increasing exports. However, it returned to growth in January amid rising orders from emerging markets and falling costs.
CIPS chief executive David Noble said: "Whilst the tentative boost in employment is a sign of increased confidence in the sector, this can be attributed to efforts to fulfil the growth in new orders seen at the beginning of the year."
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