Output growth remained marginal in June, and while the expansion extended the current sequence of increase to 26 months, but the rate of growth was below the long-run series average.

New orders in manufacturing in June meanwhile contracted for the first time in almost two years, albeit only marginally, Markit notes, adding that "the decline was largely attributed to weaker client demand and a reduction in new customers.

“Weaker output growth and the first contraction in new orders since July 2016 were key factors behind a deterioration in operating conditions in June," Markit economist Sian Jones commented, noting that "less robust client demand was also evident in reduced pressure on capacities, with employment levels and backlogs contracting further."

In the meantime input cost inflation remained elevated in June, with the marked pace of increase largely attributed to higher raw material costs, especially oil, and exchange rate depreciation. The rise in cost burdens was faster than the long-run series average in the reporting month.

As a consequence, despite difficult demand conditions, manufacturing firms reported a sharp rise in output charges. The pace of factory gate price inflation was the second fastest since September 2015, according to Markit, stemming from robust increases in input costs.

Nevertheless, output expectations for the coming year remained robust in June, despite dipping to a six-month low. "Anecdotal evidence linked optimism to hopes of greater production and increased product development," the report suggests.