Manufacturing growth slows as costs pushed higher by fall in pound

UK manufacturing growth slowed unexpectedly in November as the plunge in the pound boosted exports but pushed up costs, figures show.

The closely-watched Purchasing Managers' Index (PMI) gave a reading of 53.4 - where 50 separates growth from contraction.

It was the fourth month in a row of growth and there was also a continued increase in jobs for the sector.

But the headline reading was down from 54.2 in October, and weaker than that expected by economists.

The report highlighted the double-edged effect of the fall in sterling since June's Brexit vote.

Weak sterling makes UK goods cheaper and more attractive for overseas buyers, but also means the price of raw materials and parts imported by British factories are higher.

The PMI (Other OTC: PMIR - news) figures for November saw a boost for exports, though not by as much as in previous months.

On the negative side, manufacturers' purchase and selling prices continued to rise steeply following on from a similar increase in October.

Rob Dobson, senior economist at IHS Markit (Stuttgart: A1139A - news) , which compiled the survey, said it showed manufacturing remained "in good health" for November.

"Although the recent growth spurt showed further signs of slowing, the pace of expansion is still solid and above its long-term trend," he said.

"The concern is that higher costs may in time offset any positive effect of the weaker exchange rate."

Scott Bowman, UK economist at Capital Economics, said the figures suggested manufacturing had "gained some momentum" after a contraction following the EU referendum.