Page last updated at 15:23 GMT, Tuesday, 1 September 2009 16:23 UK

Dip in UK manufacturing activity

Car manufacturers have been more positive in recent weeks

Activity in the UK manufacturing sector unexpectedly declined last month, a survey has indicated.

The Chartered Institute of Purchasing & Supply (CIPS) index fell to 49.7 in August from a revised 50.2 in July.

A figure below 50 implies contraction rather than growth. August's figure was the first fall since February.

UK shares were hurt by the data in morning trade, but losses eased after figures showed the US manufacturing sector returned to growth last month.


"The future picture for the UK manufacturing sector is still uncertain, and concerns will remain that the improvements seen in recent months may have been temporary rather than a sustainable recovery," said CIPS chief executive David Noble.

But Howard Archer, chief UK economist at IHS Global Insight, said the manufacturing sector still looked a lot healthier than a few months ago.

"Despite the fall in the headline figure, the August survey does little to dilute hopes that the UK economy will achieve expansion in the third quarter for the first time since the first quarter of 2008," he said.

"The manufacturing sector is currently benefiting markedly from the substantial stock adjustment that has taken place."

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