A survey has shown that a rebound in British manufacturing slowed from a 15-year high in June as export order growth ran out of steam.
The Markit/CIPS manufacturing PMI fell to 57.5 last month from 58 in May, in line with forecasts but still well above the 50 mark that separates contraction from growth.
'The rate at which the sector has been recouping the output lost during the recession has been nothing short of remarkable, with around one third having been recovered by the end of June,' said Markit senior economist Rob Dobson.
But he added that the latest survey provided signs that conditions may have passed their peak. 'With the impact of austerity measures on demand both here and abroad still unknown, the latter half of the year may provide a real test for the sustainability of the recovery, the economist said.
Britain's coalition government has proposed to eliminate most of a record budget deficit of about 11% of national output by the time of the next parliamentary election in 2015. That has raised concerns that Britain's fragile recovery from an 18-month recession could be choked off as the government slashes spending and hikes taxes.
The PMI survey showed export orders growth, which had probably been helped over the last year by a weaker sterling, had nearly ground to a halt. The export orders sub-index fell to 50.7 from 56.7 in May for its lowest reading since August 2009.
New orders growth slipped to its weakest since November 2009, the survey showed, although overall output continued to expand at a sharp rate. Employment - a lagging indicator - rose at its fastest pace since February 1995 as companies added staff to keep up with rising production.
