The purchasing managers' index (PMI) for the manufacturing sector fell to a 25-month low of 52.8 for the month, the figures from IHS Markit showed, as export orders fell for the first time in two years.
While the reading remained above the 50 mark indicating expansion in the sector, the weaker-than-expected reading pushed sterling down by more than 0.6 per cent against the US dollar at the time of writing to its lowest level since Wednesday.
Manufacturers had enjoyed a strong period in the last two years, with boosts from a stronger global economy and the sterling devaluation following the Brexit vote helping exporters in particular. However, the survey indicated manufacturers may be battening down the hatches ahead of potential turbulence as the UK approaches its exit from the EU, with business optimism in the sector falling to a 22-month low.
Helena Sans, head of manufacturing at Barclays, said: "Political and economic uncertainty is clearly impacting manufacturers investment intentions but one thing that is certain is in order to increase exports and drive growth, what manufacturers need to see sooner rather than later is a Brexit transition deal to avoid the risk of prolonging a more cautious and tentative approach to investment from the sector.”
The survey, which canvasses more than 600 industrial firms, showed that Brexit and the exchange rate are two of the concerns holding back confidence, although companies overall maintained a positive outlook, with 47 per cent expecting to grow over the next year.
Nevertheless, the figures are consistent with zero growth in the manufacturing sector in the third quarter, while job creation has stuttered to a halt, according to IHS Markit.