UK manufacturing has suffered a setback in its recovery, according to a survey from the Engineering Employers Federation (EEF).

The results of the survey contradict the findings of the Chartered Institute of Purchasing and Supply, which on Monday claimed the sector has recorded "subdued, but solid" growth in August.

However, the EEF found that global economic uncertainty, falling output and orders along with rising costs, continued to hit investment and jobs in the sector, and is calling on the Bank of England to cut interest rates when it meets tomorrow.

While the North-East has been boosted by a strong performance from the motor vehicles sector, all regions are still facing uncertainty after a full 18 months of recession.

Key findings of the EEF survey included:

l Output and orders fell for the sixth successive quarter, driven by weakness in world trade. Since the end of 2000, engineering output has fallen nearly 16 per cent, with manufacturing down eight per cent.

l The downturn is widespread across all industries, except in motor vehicles where domestic and export demand has led to a strong rise in output. The North-East has benefited from this, but is still technically in recession.

l Job numbers have reduced at a faster rate than in the previous three months, with more than 70,000 jobs lost in manufacturing in the first five months of the year, with more likely to come.

EEF northern director, Alan Hall said: "The recovery in UK manufacturing has been stopped in its tracks by renewed weakness in the world economy and reduced business confidence.

"The recovery could be prevented from weakening further by a quarter point cut in interest rates. With overall growth slowing and inflation under control, the Bank of England has the room to make that reduction when it decides tomorrow."

The survey, which covers more than 1,200 engineering and manufacturing companies, was conducted by the EEF in conjunction with chartered accountants and consultants RSM Robson Rhodes' national engineering group.

Bob Hale, group chairman, said: "An interest rate cut is urgently needed to give the hard-pressed manufacturing sector a much-needed boost in confidence.