British manufacturing expansion slowed in August, defying expectations for a modest improvement, survey figures from the Chartered Institute of Procurement & Supply and Markit Economics showed Tuesday.

The purchasing managers' index fell to 51.5 from 51.9 in July. Economists had expected a score of 52.

A PMI reading above 50 suggests expanding activity. However, the latest figure was well below the 54.2 average of the current near two-and-a-half year sequence of expansion, the survey said.

"The sector looks unlikely to make much of a contribution to the solid gain in broader GDP growth expected for the third quarter," Markit Economist Rob Dobson said.

Growth was subdued as the continued strength of the consumer goods sector was again offset by lackluster output growth at intermediate goods producers and the ongoing downturn in the capital goods industry, the survey noted.

"Lackluster manufacturing activity is worrying for hopes that UK growth can become more balanced and less dependent on the services sector and consumer spending," IHS Global Insight economist Howard Archer said.

Output growth climbed to a five-month high, but remained below the average for the current upturn. New order growth was led by domestic market demand. Export orders dropped for a fifth straight month and companies attributed the same to the sterling exchange rate, weak sales performance to the Eurozone and the slowdown in China.

Input prices registered a sharp drop in August, which was one of the steepest during the past 16 years. The slump mirrored a combination of lower oil prices, the sterling exchange rate and reductions in the costs of a wide range of raw materials.

Average output price inflation was near stagnant in August and below July's 11-month high, with more than 90 percent companies reporting no change in their average selling prices.

Employment growth was mildly negative in August after a 25-month sequence of job creation. Jobs were mainly shed at big manufacturers, while small and medium businesses continued to add staff.

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