LONDON, June 1 Reuters Britain39;s manufacturing output fell for a third month in a row in May and new orders declined at the fastest pace in four, but there were signs that the worst of the inflation surge may have passed, an industry survey showed on Thursday.

The final reading of the SP GlobalCIPS UK manufacturing Purchasing Managers39; Index PMI was 47.1, down from 47.8 in April and further below the 50 threshold that separates growth from contraction. The provisional PMI figure was 46.9.

May39;s fall partly reflected a softening in new orders as well as fewer working days due to an extra public holiday to mark the coronation of King Charles.

Rob Dobson, SP Global39;s director of market intelligence, said nearterm conditions remained challenging as the manufacturing downturn accelerated.

Total new orders dropped to 46.6 from 47.7, the fastest pace of decline since January. Factories noted subdued market confidence and an economic slowdown.

Britain39;s economy has so far fared better than expected this year, defying many forecasts of a recession, but it remains the slowest of the Group of Seven rich nations to recover from the hit caused by the coronavirus pandemic.

SP Global said overseas orders declined for the 16th month in a row amid lower demand from the U.S. and mainland Europe.

The retrenchment in export demand is also being exacerbated by some EU clients switching to more local sourcing to avoid postBrexit trade complications, Dobson said.

However,…