The recession in manufacturing has begun to take its toll on recruitment, with fewer firms in the sector hiring new staff.

The survey by the British Chambers of Commerce of 7,751 UK firms revealed manufacturing was slipping into recession as confidence in the sector dropped, with sales and home orders falling considerably.

Around one in ten of the medium and large companies said they had cut back the number of staff they employed, and the number of firms trying to recruit new staff dropped from 74% in the first quarter to 62% in the second quarter.

Medium-sized companies of 200-499 employees and large companies (more than 500 employees) found it considerably easier to recruit staff, with a decrease from the previous quarter of 14 and 29 points respectively.

Overall, the number of firms finding it difficult to recruit in manufacturing dropped from 75% to 62%.

But Colin Smith, managing director of the specialist manufacturing recruiter AES, said the recession would not end the skills shortages facing the sector.

He said: ‘At the moment, manufacturing is in recession but we have full employment and we have massive skills shortages.

‘During the last recession we had people queuing outside the gates for work - now firms are still desperate to recruit that mythical 25-30 year old mechanical engineer with five years’ experience.’

Smith said the previous recession, when companies cut back on training, and the unfashionable image of manufacturing among teenagers caused the acute skills shortages.

The figures also revealed a serious shortage of skilled manual workers, with 40% of firms in the survey claiming they found it difficult to recruit them.

In the service sector, the number of firms trying to recruit new staff has increased after a drop at the beginning of the year, with the number of firms taking on staff increasing to 69%, the number recorded at the end of 2000.

The hiring increase followed a drop in recruitment during the first quarter of 2001 to 64%.