MANUFACTURERS have slashed jobs after the high street crisis exacerbated poorer demand and EU referendum worries, a report has revealed.

The industry has dropped to a three-year low amid a “bleak landscape” that is causing an “atmosphere of deep unease”, according to the latest Markit/CIPS purchasing managers’ index survey.

It said 20,000 posts were cut over the last three months, with bosses highlighting deteriorating exports, weaker domestic demand and retail uncertainty, including woes at BHS and Austin Reed, for the despair.

The industry recorded a reading of 49.2 in April, which was below the 50 mark used to separate growth from contraction.

The number was the lowest since February 2013.

According to the report, companies are attempting to overcome fewer orders by running down stock, which, however, has left suppliers struggling against reduced raw material sales.

Rob Dobson, senior economist at Markit, which compiles the study, said the situation was extremely worrying, reiterating its impact on the employment landscape.

He said: “Manufacturing production is now falling at a quarterly pace of around one per cent, and will likely act as a drag on the economy again during the second quarter, putting greater pressure on the service sector to sustain GDP growth.

“The manufacturing labour market is also being impacted, with close to 20,000 job losses over the past three months.

“Manufacturers are emphasising slower domestic demand growth and declining new export orders as key weaknesses, amid rising uncertainty about the global economy, the oil and gas industry, retail sector and the EU referendum.

“With this backdrop unlikely to change in the coming months, the second quarter is likely to remain a bleak landscape.”

David Noble, chief executive at the Chartered Institute of Procurement and Supply, said concerns over jobs situation could heighten, as high street firms’ problems add to EU referendum uncertainty and troubles in the offshore energy sector.

He added: “Fears over a stall in manufacturing have become a reality and driven the steepest decline in three years.

“An atmosphere of deep unease is building throughout the manufacturing supply chain, eating away at new orders, reducing exports and putting more jobs at risk.

“A sense of apprehension is being caused by enduring volatility in the oil and gas industry, falling retailer confidence and the uncertainty created by the EU referendum.

“In a month that saw the collapse of BHS, manufacturers are compensating for stalling new order growth by depleting stocks and dramatically cutting the amount of raw materials they buy from suppliers.

“Manufacturing jobs are under pressure and the sector is nervously waiting to see whether this is a temporary blip or the beginning of a more pervasive slow down.”