June’s reading of 54.4 was slightly above the May figure of 54.3, and almost four points below the 51-month high reached in November last year. The average reading over the second quarter of the year (54.2) is the weakest outcome since the final quarter of 2016.

The rate of overall expansion in manufacturing slowed as growth of new order inflows increased only slightly. Some companies noted that higher output had been sustained through inventory-building and clearing backlogs of work.

Although the rate of increase in new business edged up to a three-month high, it remained among the weakest registered over the past 18 months. Rates of growth in new work were broadly steady in both domestic and overseas markets. Where an increase in new export business was reported, this was partly linked to increased sales to Europe, China, South America and Australia.

June did see a solid improvement in job creation, with staffing levels rising at the quickest pace for three months. Employment increased across the consumer, intermediate and investment goods sectors. However, the overall rate of jobs growth remained below those seen through much of 2017.

Input cost inflation accelerated to a four-month high in June, with companies reporting a wide range of inputs as up in price. Some noted that cost increases were being exacerbated by shortages of certain raw materials. Part of the rise in costs was passed on as higher selling prices. Business optimism remained positive in June. Over 51% of the survey panel forecast output to rise over the coming year, linked to market growth, investment spending, organic expansion, planned promotional activity and higher capacity. However, the degree of positivity dipped to a seven-month low, as some firms expressed concerns about input price increases, possible future trade tariffs, the exchange rate and Brexit uncertainty.

“The UK manufacturing sector ended the second quarter on a subdued footing. The turnaround in performance since the start the year has been remarkable, with impressive growth rates late last year turning into some of the weakest rates of expansion seen over the past two years in recent months,” said Rob Dobson, director of IHS Markit. “The slowdown in new order growth since earlier in the year has also left manufacturers increasingly reliant on backlogs of work and inventory building to maintain higher output. This is a position that cannot be sustained far beyond the immediate horizon. The trend in demand will need to stage a much firmer rebound if a further slowdown in output growth is to be avoided.

“How likely such a revival is remains in some doubt, with the June survey also seeing business optimism drop to a seven-month low amid rising concerns about possible trade tariffs, the exchange rate and Brexit uncertainty. Ongoing supply-chain disruptions, including raw material shortages, and signs of a renewed upswing in input price inflation may also jeopardise stronger manufacturing growth. With industry potentially stuck in the doldrums, the UK economy will need to look to other sectors if GDP growth is to match expectations in the latter half of the year.”