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Pace of new orders slows

UK manufacturing output rose last month at its fastest pace since September 2011, a survey from the Chartered Institute of Purchasing and Supply (CIPS) shows.

But manufacturers suffered a sharp slowdown in new order growth and employment was virtually static, highlighting the challenges facing the sector as the wider UK economy teeters on the brink of triple-dip recession.

UK gross domestic product fell 0.3% in the final quarter of last year.

Further contraction in the first quarter of 2013 would mean the UK had notched up its third recession since 2008.

A key clue on how the first quarter has started will come next week when CIPS publishes its survey of January activity in the UK's dominant services sector.

CIPS' UK manufacturing output index rose from 53.4 in December to 54.2 in January on a seasonally adjusted basis, moving further above the level of 50 calculated by CIPS to separate expansion from contraction and thus signalling faster growth.

But CIPS' manufacturing purchasing managers' index, a composite measure including output, new orders, employment, suppliers' delivery times and stocks of goods purchased, fell from 51.2 in December to 50.8 in January.

Rob Dobson, senior economist at survey compiler Markit, said: "With manufacturing only accounting for around 10% of the economy, the survey will do little to assuage fears of a triple-dip recession unless it is accompanied by an improvement in the services sector, which contracted at the fastest rate for two years in December."

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