Manufacturing output in August grew at its fastest rate in August since December 2007, according to the latest CIPS-Markit survey.

The survey found that while the headline purchasing managers’ index (PMI) fell to 49.7 in August from 50.2 in July, output contiuned to rise and new export business stabilised.

However, new orders rose at a slower pace and job losses were recorded for a 16th sucessive month.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, says: “The future picture for the UK manufacturing sector is still uncertain, and concerns will remain that the improvements seen in recent months may have been temporary rather than a sustainable recovery. Though August saw the trend in output build on the momentum gained at mid-year, the moderation in the rate of new order growth is worrisome. The investment goods sector in particular showed surprising vulnerability, as domestic and foreign demand for UK capital products fell back following gains in July.

“On the back of subdued global demand coupled with strong competition, deflation is still a concern as output prices continued to fall. Subsequently, firms streamlined their practices and reduced levels of stock. Purchasing managers also reported that workforces were trimmed further along with excess capacity and costs, particularly amongst larger-sized manufacturers.”