MANUFACTURERS continued to cut jobs last month as companies failed to mirror signs of recovery by counterparts in Europe.

The sector grew at its slowest rate in seven months during March, while rates of growth in production and new orders cooled, the Chartered Institute of Purchasing and Supply (CIPS) said.

As employment declined for the 12th successive month, soaring energy bills meant costs were high while there was low demand from the domestic and foreign markets.

The CIPS barometer for activity in the manufacturing sector fell from 51.5 in February to 50.8 in March - a reading above 50 indicates an expansion in activity, while a figure below 50 indicates contraction. The equivalent eurozone measure has seen a 1.6 point jump to a seven-year high of 56.1.

CIPS director Roy Ayliffe described the UK figures as "yet another subdued performance by the UK manufacturing sector".

The rate of expansion in new order volumes reached an eight-month low, although producers of investment goods reported marked success in export markets.

Sarah Green, regional director of the Confederation of British Industry (CBI) said the figures differed from those released by the CBI at the end of last month.

She said those figures had shown a recovery in orders for manufacturing companies dealing in capital goods while consumer goods remained flat, in keeping with the slump in high street sales.

Malcolm Barr, UK economist at JP Morgan, believed the research was doubly disappointing given that readings elsewhere in Western Europe had been so strong in the month.