Manufacturing confidence rose for the second consecutive month in June, according to the CIPS/Markit Purchasing Managers’ Index.

The index hit 50.8 in July, up from an upwardly revised figure of 47.4 in June. on the back of new orders growing at their fastest rate for 20 months. This is the first time the index has been above the no change mark of 50 since March 2008.

Production rose for a second successive month to their highest levels since December 2007.

Employment levels fell for the fifteenth month running in July, but the rate of job cuts was the least severe since June 2008.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, says: “The manufacturing sector has clearly pulled out of the nosedive it was in earlier this year and is no longer plummeting. Firms continued to slash inventories so severely that the downturn has been much deeper than might have been expected. However, output and new orders are both now rising as firms need to order new stock to meet sales.

“While this is positive news, the manufacturing sector is still far from healthy and smaller firms continue to bear the brunt. News of the Government’s £150m cash injection, though welcome, will only benefit advanced manufacturing. We may have to accept that the face of British manufacturing has changed forever and the sector will stabilise at a much-reduced size than before the recession. If this is the case then employment levels may never return to what they once were.”