Seventh consecutive fall in manufacturing activity

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Manufacturing activity shrunk at a record pace last month as fresh figures fuelled fears today about the depth of the UK recession.

The latest purchasing managers' index for the industry showed a reading of 34.4 in November - the lowest level in the survey's near 17-year history.

Output, new orders and employment all hit new lows as the sector continued to struggle in the economic downturn.

The data marks the seventh consecutive month of falls for the sector and was below City forecasts of 39.7.

Roy Ayliffe, director of professional practice at the Chartered Institute of Purchasing and Supply (CIPS), said manufacturers had been dealt an "unparalleled blow".

"Though there were some gasps of relief as the cost of key commodities slumped for the first time in over six and a half years, even this was another echo of dwindling global demand," he added.

Even weaker sterling failed to drive an upturn in foreign clients, indicating that the global scale of the economic downturn. Companies surveyed said they had seen falls in orders particularly from clients in the US, mainland Europe and east Asia.

The data showed job losses accelerated sharply to a survey record as companies started cutting their workforces. The employment index registered 35.7, remaining below the critical no-change mark of 50 in every month since April.

New orders also fell to a reading of 29.7 - the greatest rate of contraction since the survey began in 1992.

ING economist James Knightley said the data "intensified worries about the potential depth of the UK recession" and would boost the likelihood that the Bank of England will make another sharp cut in interest rates on Thursday.

He said one positive sign was that manufacturers appeared to be improving their profit margins, as input costs fell and output charges continued to rise.

"However, this is unlikely to last as the recession intensifies over the next two quarters," he said.