Production and employment fall at record rates

The recession in UK manufacturing deepened last month after figures showed levels of production and employment fell at record rates.

The Chartered Institute of Purchasing and Supply's (CIPS) index of overall activity for February came in at 34.7 - the weakest since November's record low of 34.4. It is also the tenth successive month that the industry barometer has been below the critical 50 mark, which signals industry growth.

The breakdown shows employment and output at their weakest since the series began in 1992, leading CIPS to estimate around 30,000 UK factory jobs were being axed each month as firms cut costs in the face of weaker demand.

Today's figures also point to an annual decline in manufacturing production of around 12 per cent, with larger firms increasingly under pressure.

CIPS director Roy Ayliffe said: "While the recession initially hit small and medium-sized companies, the worst, larger manufacturers - especially those dependent on the automotive and construction sectors - are increasingly struggling.

"And with bigger firms now in the equation, we are seeing jobs slashed at a record rate as firms try to survive the unrelenting market conditions."

The rate of decline in new export orders accelerated sharply in February, moving back towards the record seen in December. Despite the mitigating influence of a weaker pound, firms reported reduced demand from East Asia, the eurozone, the Middle East and the United States.

Factory gate price deflation was the fastest for almost seven years, reflecting stronger competition, weakening demand and lower costs.

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