Manufacturing output eases to eight-month low

Activity in Britain's manufacturing sector drifted to an eight-month low in February as a jump in new orders failed to counter a slowdown in production.

The closely watched Markit/CIPS UK Manufacturing purchasing managers' index (PMI) showed a reading of 55.2 last month, down from January's 55.3, but above economist expectations of 55.0.

A reading above 50 indicates growth.

Despite new orders picking up pace over the period, companies saw production growth eke out its slowest expansion for nearly a year.

The sluggish performance marks a stark contrast to the final months of 2017 when manufacturers ended the year on a strong footing, with output climbing to a four-year high in November.

Sterling was marginally lower against the US dollar at 1.37 shortly after the announcement. Versus the euro, the pound was slightly ahead at 1.12 euro.

Rob Dobson, director at IHS Markit, said February's performance gave "mixed signals" on the health of the UK manufacturing sector.

He said: "The PMI's Output Index fell to its second-lowest level since the EU referendum and, based on its past relationship with official ONS data, is consistent with only a subdued 0.4% quarterly pace of growth in production volumes.

"This would represent a marked downshift from the 1.3% increase signalled for the final quarter of 2017, providing a further brake on the rate of expansion in the wider economy.

"However, positive news was provided by other survey indicators that are suggesting output growth may revive in the coming months.

"New orders showed the largest monthly gain since November and are outpacing the rate of growth in output to one of the greatest extents in more than a decade."

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