UK manufacturing activity weakened sharply last month, a survey showed on Tuesday, suggesting that exporters’ gain from a weaker pound has been more than offset by slower domestic demand and intense cost inflation.

The Chartered Institute of Purchasing and Supply and the research group Markit said their index of activity in the sector dropped sharply from 49.5 in May to 45.8 in June, much weaker than expected, reflecting falling orders as clients postponed or cancelled projects.