UK manufacturing activity unexpectedly slowed in June, sliding back from May's near-two-year high as disruption from the Red Sea hits demand from overseas customers.
S&P Global's UK Manufacturing purchasing managers' index (PMI) fell to 50.9 last month, down from 51.2 in May and lower than the 51.4 flash estimate.
Despite the drop, activity remained ahead of the 50 mark, which indicates an industry in growth.
There was a upswing in cost inflationary pressures described as "modest", with input prices rising at the quickest pace since January 2023.
S&P claimed the industry's backdrop remained positive in June, with new orders and output lifting despite employment falling, delivery times increasing and input costs rising at the fastest rate since January 2023.
"Shipping issues resulting from the Red Sea crisis, low stocks at suppliers, insufficient vendor capacity and port issues all led to longer lead times," S&P said.
Rob Dobson, director at S&P Global Market Intelligence, said: "The UK manufacturing sector is enjoying its strongest spell of growth for over two years, with June seeing output and new order growth sustained at robust rates similar to May's recent highs."
While the domestic market is a "real positive", the weak export performance is "concerning, with manufacturers reporting difficulties in securing new business in several key markets including the US, China and mainland Europe", Dobson said.
Manufacturers maintained some optimism about the future but concerns about cost minimisation and cash flow protection remained paramount.
"This led to further job losses, cuts to non-essential spending and efforts to operate on leaner stock holdings," said Dobson. "This is coming from a backdrop of renewed cost inflation pressure, with manufacturers' input prices now rising at the quickest pace since the start of 2023.
"This renewed upward lurch in manufacturing prices will likely add to concerns over the potential stubbornness of underlying inflationary pressures among hawkish rate setters at the Bank of England."