The UK's beleaguered manufacturing industry increased production at its sharpest rate for 15 months during August, key industry figures showed yesterday.

According to the Chartered Institute of Purchasing and Supply's (Cips) Purchasing Managers' Index, new orders for the manufacturing sector were also at 15-month highs last month.

The Cips index, which shows the overall condition of the manufacturing economy, rose to 51.9 in August from 51.1 in July.

Any figure more than 50 shows an increase in production with anything below indicating a decline.

Volumes of new business have continued to grow since April and the latest expansion partly reflected a return to growth of new export orders.

The improvements in new business during August was widely reported by respondents to the Cips survey to reflect a combination of more competitive exchange rates, increased client confidence and improved market conditions.

The rise in new orders supported growth in manufacturing output.

Production volumes rose for the fourth consecutive month and some firms reported production had been stepped up in order to take advantage of lower output prices.

Growth was achieved in spit of sustained efforts to cut staffing levels.

Efficient working practices and further gains in productivity allowed some firms to cut jobs.

The August data showed well over three-and-a-half years of uninterrupted job shedding in the manufacturing sector, although the rate of decline was only slight, and the least marked to be recorded since January 2001.

With firms working to satisfy new orders and existing bookings, companies questioned for the survey said they had not continued to build inventories of finished goods.

Meanwhile, average costs for inputs were down for the third successive month in August with the rate of decline at its sharpest since March last year, reflecting cheaper plastic, polymer and chemical prices.

Tuesday September 2, 2003