British manufacturing output and new orders declined in July at the fastest rate since May 2020, as factories across Europe struggled with rising costs and slowing demand, a survey showed on Monday.
The S&P Global/CIPS UK Manufacturing Purchasing Managers' Index (PMI) fell last month to 52.1 from 52.8 in June, revised down slightly from a preliminary "flash" July reading of 52.2.
The fall would have been greater but for an upward revision to the survey's jobs index.
The survey's gauges of output and new orders fell sharply and reached their lowest levels since the onset of the COVID-19 pandemic, which caused a widespread shutdown of the economy.
A Lloyds Bank survey of businesses published on Friday also showed manufacturers had been hit hard by rising inflation.
"The reduction in total new orders was linked to the cost of living crisis, weak domestic demand, client uncertainty, warmer-than-usual weather and lower intakes of new export business," survey compiler S&P Global said.
Export orders also contracted, in part due to Brexit problems, S&P Global said.
Manufacturers' input and output prices rose at the slowest pace in more than a year, which could reassure Bank of England officials about the extent of inflation pressure in the economy.
Economists increasingly think the BoE will raise interest rates by 50 basis points rather than 25 basis points on Aug. 4 as it seeks to stop the recent surge in inflation to 9.4% from becoming embedded in the economy. (Reporting by Andy Bruce Editing by William Schomberg and Toby Chopra)