GROWTH in British manufacturing unexpectedly eased to its slowest pace in eight months in March and prices paid by factories fell, a survey showed on Tuesday, according to new figures.
The strong pound appears to have proved a drag on exports last month as the sector recorded a worse-than-expected reading of 55.3 for the closely-watched CIPS/Markit purchasing managers index survey - where the 50 mark separates growth from contraction.
It was a sharp fall from a reading of 56.2 for February.
The survey found that manufacturers continued to scale up production at a solid clip and economists said that while the sector had lost some steam during the first quarter, it was unlikely to herald a new slump.
Rob Dobson, senior economist at Markit, said: "Growth is merely hot rather than scorching, and the take home messages from the March survey are that the recovery remains slow and continues to drive strong job creation."
But the figures are likely to come as a blow to the prospects of rebalancing the economy away from consumer spending, with the manufacturing sector still some way off its pre-recession peak.
They showed production and new orders had continued to rise, maintaining a positive start to 2014. There had also been further job creation.
But there was a slowdown in the pace of improvements last month, centred on the investment goods sector.
The main source of new contracts was in the domestic market, with the trend in export orders weakening further and March seeing the slowest pace of growth in this area for 10 months, with a slackening of new business from the Far East.
Experts at consultancy Capital Economics said: "Although the sectors recovery may have lost some steam over the first quarter, this seems unlikely to herald the beginning of a renewed slowdown.
"Meanwhile, a sharp fall in the export orders balance suggests that the strong pound may finally be starting to hurt exporters."
Howard Archer of IHS Global Insight said while the figures were disappointing, they still pointed to decent growth in the sector.
But he said: "Slightly worryingly, the survey indicated that March's slowdown in manufacturing output and new orders was mainly centred on the investment goods sector.
"This was not good news for hopes that business investment can see sustained robust improvement over the coming months and help the economy become more balanced," he added.