Slide in orders hits optimism over economic recovery

Manufacturers dampened the growing optimism over the recovery yesterday, as figures showed them suffering sliding order books and a rising oil price last month.

The sector is still just managing to expand, according to the Chartered Institute of Purchasing and Supply/Markit index, but the pace of growth cooled after January's eight-month high. The index, where a score over 50 signals growth, slowed from 52 to 51.2 over the month.

The Bank of England will be worried by the impact of the recent sharp spike in oil prices on manufacturers' input costs, which rose at the fastest pace for 19 years last month.

Meanwhile, orders from the eurozone tailed off, despite improved demand by the US and Asian markets.

The manufacturing wobbles come as the debate among the Bank's rate-setters intensifies over policy.

David Miles argued for an "aggressively loosening" of monetary policy, which would enable rate-setters to hike interest rates earlier. His views contrast with colleague Martin Weale, who voiced fears over inflation yesterday and said the Bank must not extend quantitative easing.