UK manufacturing growth slowed in January as output and the pace of new orders eased, while rising price pressures cast doubt on hopes that consumer price inflation had peaked at 3.1% in November.
However, manufacturing output continued to rise at a solid pace despite the rate of expansion falling to a six-month low, according to British purchasing managers.
Purchasing managers index (PMI)
The headline manufacturing PMI eased to 55.3 in January from 56.2 in December, defying expectations of a rise to 56.5. The 50 level indicates the boundary between contraction and growth - the higher above 50, the stronger the implied growth in business activity.
Higher production reflected rising new order intakes, but at the slowest pace in seven months, according to the survey by IHS Markit and the Chartered Institute of Procurement and Supply.
Purchasing prices, however, rose at the fastest pace in 11 months, with companies reporting chemicals, food, metals, energy, paper and plastics prices all rising.
As manufacturers struggled to absorb rising input costs, part of the rise in costs was passed on to clients in the form of higher selling prices - with January seeing the steepest increase in output charges since April 2017.
"These price trends will be watched closely to see if the upsurge is simply a one-off spike or something more embedded,” said Rob Dobson at IHS Markit.
Ruth Gregory, UK economist at Capital Economics, said: "All in all, the figures haven’t changed our view that the manufacturing sector should continue to provide strong support to GDP growth, helping to offset the slowdown in the consumer services sector."
Sterling was among the best performing currencies of January, and on the first day of February is was higher again, rising 0.36% against the dollar $1.4239, and up 0.15% to €1.1451 versus the euro.