The heartbeat of the manufacturing sector revival has weakened to its slowest since the rebound began in thd summer of 2003, deepening concerns over a return to recession.

The Chartered Institute of Purchasing & Supply said that its index figure of factory activity fell to 51.8 last month from 53.3 in December. The reading, which dashed City hopes of an acceleration in manufacturing prosperity, was the weakest since July 2003.

The sector shed jobs for a second successive month, and at a faster rate, with export orders falling for the first time in five months. "The strength of sterling, especially against the US dollar, impacted on the competitiveness of UK manufacturers," the report said.

Raw material bills continued to soar, with companies polled by CIPS reporting "high metals, plastics, energy and oil prices".

Chris Williamson, the chief economist at NTC, which compiled the survey, said: "This was a particularly disappointing survey. It’s principally a reflection of the struggle UK manufacturers are having at the moment with the strength of sterling."

The figures follow official data last week indicating that manufacturing had fallen back into recession, with output dropping by 0.2 per cent in the last three months of 2004 after declining by 0.8 per cent the quarter before.

Howard Archer, the Global Insight economist, said that the CIPS report added to "the clear evidence that the manufacturing sector has been substantially pressurised in recent months by higher interest rates, strong input prices, a moderation in demand in key export markets and the strength of sterling against the dollar."

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