THE beleaguered manufacturing sector bounced back last month as demand recovered.

The monthly report by the Chartered Institute of Purchasing and Supply (CIPS) showed that the sector recorded subdued, but solid growth in August.

Its index measured 51 during the month, up from 49.1 in July. A reading above 50 indicates growth, while below that level shows contraction.

The CIPS said the manufacturing sector had seen strong growth in output as well as a recovery in order books.

The rise is good news for the sector, following the shock drop in manufacturing recorded in June.

Official figures showed it contracted by 5.3 per cent after because of working days lost to the Golden Jubilee celebrations and the World Cup.

Manufacturing figures released on Friday are expected to show a strong bounce back in July, and the data will raise hopes of a healthy rebound.

The CIPS report showed that output rose sharply during the month, after three months of slowing production.

Its index of manufacturing output showed a reading of 55 in August, up strongly from the 50.2 recorded in July.

However other data from the survey showed firms continued to minimise operational costs by cutting staff and inventory levels.

Last month saw a further decline in staffing levels, despite the latest strong growth of output, while firms continued to utilise existing stocks wherever possible.

The seasonally-adjusted Employment Index was on 47.2 in August compared with 47.8 in July, down slightly from the previous month, with staff cuts similar to those since May.