UK manufacturing activity fell for a second consecutive month in March, a key survey has revealed, fuelling concerns about the prospects for an economy teetering on the brink of triple-dip recession.

The survey, from the Chartered Institute of Purchasing and Supply (CIPS), also showed further falls in manufacturers' total new orders, incoming export business, and employment.

CIPS's manufacturing purchasing managers' index, a measure of activity which includes output, new orders, employment, suppliers' delivery times and stocks of goods purchased, edged up from 47.9 in February to 48.3 in March on a seasonally-adjusted basis, but crucially remained stuck below the level of 50 deemed to separate expansion from contraction.

The manufacturing output index dropped from 48.5 to 47.5 – to signal the fastest rate of decline since last October.

While UK manufacturers' output and total new orders have suffered renewed falls in February and March, their incoming export orders have declined for 15 consecutive months on the basis of CIPS's survey.

Manufacturing employment declined for an eighth consecutive month in March.

CIPS's latest survey is at odds with Chancellor George Osborne's vision, offered in his March 2011 Budget, of a "Britain carried aloft by the march of the makers".

UK gross domestic product (GDP) fell 0.3% in the final three months of 2012. A further drop in the first quarter would see the UK economy record its third recession since 2008.

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The purchasing managers' survey indicates there was little easing in manufacturers' difficult start to the year in March, suggesting that the sector not only likely suffered contraction in the first quarter but faces a tough second quarter.

"With construction output also likely to have fallen in the first quarter, it is becoming ever more apparent that it will have needed clear expansion in the services sector to have prevented a second successive GDP drop and triple-dip recession."

Samuel Tombs, UK economist at consultancy Capital Economics, said: "The weakness of the CIPS manufacturing survey in March suggests that the economy is continuing to make little progress towards rebalancing, and has kept the threat of a so-called triple-dip recession alive. With output in the construction sector falling, and struggling to increase at all in the much-larger services sector, another poor industrial performance could well be enough to put the economy back in recession."

Rob Dobson, senior economist at CIPS survey compiler and financial information company Markit, said: " March PMI data indicate that the UK manufacturing sector contracted again during the opening quarter of 2013, to remain a drag on the broader economy."

David Noble, chief executive officer of CIPS, emphasised manufacturers' export woes were not entirely the result of eurozone economic troubles.

He said: "UK manufacturing exports have been hit directly not only by the problems in the eurozone, but also by strong competition overseas. Despite demand in the US and south Asia, competition for contracts is tough and British manufacturers are increasingly struggling to peak in these markets."