The UK manufacturing sector ended 2017 on a positive note. Although December saw rates of expansion in output, new orders and employment slow from November's highs, growth in all three remained solid and well above long-run trends.

The seasonally adjusted IHS Markit/CIPS Purchasing Managers' Index® (PMI®) posted 56.3 in December, down from November's 51-month high of 58.2. The headline PMI has now remained above the 50.0 no-change mark for 17 consecutive months. The average reading over the final quarter of 2017 (57.0) was the best since the second quarter of 2014.

Manufacturing output and new orders have both expanded throughout the past 17 months. Companies reported that production was scaled up in response to solid inflows of new work and the launch of new product lines.

Output growth accelerated in the intermediate and investment goods sectors, but slowed at producers of consumer goods. The strongest pace of expansion overall was registered in the intermediate goods category.

Part of the increase in new business at UK manufacturers reflected a solid increase in new export sales. Demand improved from clients in Europe, the USA, China and the Middle East.

UK manufacturers maintained a positive outlook in December, with close to 54% of companies reporting that they expect production to rise over the coming year. Positive sentiment reflected investment in capacity and machinery, expected growth in domestic demand and export sales, new product launches and efforts to increase market share.