A survey has shown that growth in British manufacturing activity slowed unexpectedly last month to its weakest pace since March.
The CIPS/RBS Purchasing Managers Index eased to 51.9, its lowest reading in nine months, compared with 52.5 in November. A reading above 50 indicates expansion.
CIPS said the manufacturing sector performed better in 2006 than in 2005, with higher rates of growth for production and new business, but did not match 2004's performance.
'The final quarter of 2006 has seen the expansion of the UK manufacturing sector gradually slip back to its trend level following the surprisingly robust performance seen in the middle of the year,' said RBS chief economist Andrew McLaughlin.
Factory output growth, while recording its 18th straight month of expansion, eased to a nine-month low of 52.1. The index for incoming new orders posted a 19th successive month of growth but eased slightly to 53.1, its weakest since August. Demand for British goods abroad slipped as export orders in December eased to the weakest since August, slipping to 51.5 from 52.5 in November.
Price pressures are cooling in the sector, however, with the 58.3 reading for input price inflation marking the weakest rate of increase since August 2005. It was also well below November's strong 62.5. While timber, metals and plastics prices contributed to upward price pressures, a weaker dollar pushed down the cost of some raw materials sourced from dollar-denominated markets, CIPS said.
Meanwhile, the euro zone's purchasing managers' index fell to 56.5 in December from 56.6 the previous month.
