The upturn in the UK manufacturing sector cooled slightly in August, as rates of growth in both output and new orders lost momentum.
The outlook showed greater signs of positivity, however, as business optimism rose to a six-month high.
There was also better news on the costs front, as average purchase price inflation slowed for the third consecutive month.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to a five-month low of 51.7 in August, down from 51.9 in July but above the earlier flash estimate of 51.5. The PMI has posted above the neutral 50.0 mark separating expansion from contraction for ten months in a row.
Four of the five PMI subcomponents were at levels consistent with an improvement in operating performance during August.
Output, new orders and employment all rose and suppliers' delivery times lengthened. In contrast, stocks of purchases fell for the third month in a row.
Rob Dobson, Director at S&P Global Market Intelligence, said: “The rate of expansion in the UK manufacturing sector cooled in August, with output and new order growth losing traction. There are still signs for continued optimism, however, as manufacturers reported a positive outlook for the year ahead.
“Business confidence rose to a six-month high and job creation was the strongest for two years. This suggests that the slowdown was mainly driven by a reduced focus on maintaining precautionary stocks as economic uncertainty eases, especially as domestic and overseas clients continue to show a willingness to spend albeit with a relatively high degree of caution.
“Although cost and supply chain pressures remain potentially damaging, there was better news on these fronts too. Volatility in energy markets, supply constraints, geopolitical strife and transportation disruptions are all keeping cost rises at elevated levels, but August at least saw purchase price inflation descend from recent peaks to a six-month low.
“Supply chain delays were the least marked for six months too, which should provide additional respite to cost pressures barring any further major disruptions.”
