GROWTH in Britain’s manufacturing sector slowed last month, as companies were hit by the falling pound driving up costs, according to a report.

The latest Markit CIPS UK Manufacturing purchasing managers index (PMI) showed output was 53.4 in November, down from 54.2 a month previously.

A reading above 50 indicates growth.

The latest figures showed the manufacturing sector had grown for the fourth month in a row and above the long-run average of 51.5, but was down from September’s high of 55.5.

The report said there were signs the weak exchange rate was having a “continued sharp cost inflationary impact”, leading to higher selling prices.

Costs rose at a level close to October’s near six-year record and again at one of the fastest rates in the survey’s history.

However, the price of Sterling had led to a boost in export competitiveness, resulting in new business from abroad, according to the report.

It added that companies had reported improved demand from the USA, mainland Europe and the Middle East.

Rob Dobson, senior economist at HIS Markit which compiles the survey, said: “The latest PMI indicates the UK manufacturing sector remained in good health during November.

“Although the recent growth spurt showed further signs of slowing, the pace of expansion is still solid and above its long-term trend.

“This should be sufficient to ensure manufacturing is a positive contributor to fourth quarter GDP” he added.

November also saw employment in the manufacturing sector increase for the fourth straight month, albeit below the level seen in October, according to the report.

Mr Dobson added: “The boost to export competitiveness is leading to increased inflows of new export business.

“However, 84 per cent of manufacturers offering a reason for higher purchase prices made at least some reference to rising import costs due to the exchange rate.

“The concern is that higher costs may, in time, offset any positive effect of the weaker exchange rate, especially given that export order book growth has already waned markedly from September’s five-and-a-half year high.”