THE UK manufacturing sector returned unexpectedly to growth in September, a key survey revealed yesterday, but economists cautioned its output would likely have declined or been flat over the third quarter as a whole.

And the manufacturing sector shed workers for a third straight month in September, the survey from the Chartered Institute of Purchasing and Supply showed.

Even though the survey also underlined the difficult outlook for manufacturing, the sector’s return to growth in September provided a rare ray of light amid almost unremittingly gloomy recent economic indicators.

Some economists believed the better-than-forecast survey might make it slightly more likely the Bank of England’s Monetary Policy Committee could hold off from increasing the scale of its boost to UK money supply beyond the current £200bn until its November meeting. But they acknowledged further monetary easing remained a distinct possibility at the close of the MPC’s next two-day meeting at noon on Thursday. And CIPS’ survey of how the dominant UK services sector performed in September, due tomorrow, is likely to have a greater bearing on the MPC’s deliberations.

Minutes of the nine-strong MPC’s September meeting signalled members were moving closer to increasing the scale of “quantitative easing” through which the Bank has boosted money supply in an attempt to stimulate the economy.

CIPS’ headline purchasing managers’ index for manufacturing, a composite measure of activity in the sector which includes output, new orders, employment, suppliers’ delivery times, and stocks of goods purchased, rose from 49.4 in August to 51.1 in September on a seasonally-adjusted basis. This was the first time that it had been above the level of 50 which separates expansion from contraction since June.

But CIPS noted the average UK manufacturing PMI reading for the third quarter was just 50. This was down from an average of 52.7 in the second quarter. The manufacturing PMI was at a near-record 59.4 in the opening three months of 2011.

The new orders index rose from 48 in August to 50.5 in September. The manufacturing output component showed growth again in September, having declined in August, but economists noted this appeared to have been facilitated by the steepest monthly drop in backlogs of work for two years.

The survey pointed to an acceleration in the rate of decline of new export orders, which fell at the fastest pace since May 2009.

Samuel Tombs, UK economist at consultancy Capital Economics, calculated CIPS’ average manufacturing output index for the third quarter was consistent with a fall of as much as 1% quarter-on-quarter in the three months to September on the basis of data from the Office for National Statistics. He noted such an outturn would be a steeper fall than the 0.5% decline reported by the ONS for the second quarter.

Mr Tombs said CIPS’ manufacturing survey “suggested the sector might have eked out growth last month”, but added: “Nonetheless, it seems likely that industry remained in recession in Q3 as a whole and that the bounce in the survey will prove to be temporary. September’s CIPS survey provides little reassurance that the downturn in the industrial sector might be coming to an end. Indeed, crumbling demand from overseas suggests that further falls in output are likely this year.”

Rob Dobson, senior economist at financial information company Markit and author of the manufacturing survey, said: “The modest return to growth of UK manufacturing output in September is a positive, but it is hard to escape the fact that the sector’s performance has weakened substantially.”

He cited growth slowdowns in the US, European and Asian markets and UK manufacturers’ increased reliance on a “fragile domestic market that itself is being impacted by subdued household and business confidence and ongoing austerity measures”.