Growth at British factory companies fell to its lowest level in more than two years in August on the back of slower expansion in output and new orders, IHS Markit and the Chartered Institute of Procurement and Supply said.
The seasonally adjusted purchasing managers' index fell to a 25-month low of 52.8 in August from the downwardly revised 53.8 in July. A reading of above 50 indicates expansion.
Manufacturing production rose at the slowest pace in 17 months as new export orders dragged growth. Foreign demand declined for the first time since April 2016 despite a weaker pound, with some companies attributing the decline to the recent global economic growth slowdown.
"Based on its historical relationship with official [Office for National Statistics] data, the latest PMI report is broadly consistent with zero growth in manufacturing production, meaning the sector will likely fail to provide any support to the wider U.K. economy in the third quarter," said Rob Dobson, director at IHS Markit.
Meanwhile, business optimism dipped to a 22-month low in August, with some companies noting concerns about Brexit and the exchange rate.