The slowdown was led by a moderation in new orders and output, which expanded at the weakest rate in four months. Meanwhile, the employment picture deteriorated with hiring slowing to the weakest pace in a year. Cost pressures intensified with input price inflation rising to its highest since May, pushing firms to respond by raising their selling prices at the fastest rate since October 2013. Despite the loss of growth momentum and rising costs, business optimism strengthened to a seven-month high. Firms pointed to tax relief from recent goods and services tax rate changes and expectations of favourable demand as reasons for their confidence in the year-ahead outlook.