Industry picks up but times stay tough

A KEY survey today revealed that manufacturing growth picked up slightly in March but the hard-pressed sector continues to struggle.

The Chartered Institute of Purchasing and Supply said the strong pound against the dollar and weak demand from the eurozone led to a further fall in export orders.

Fierce competition is hampering firms' ability to pass on rising costs in the form of higher prices, it added.

The survey's headline purchasing managers' index registered 52, up marginally from the previous month's 51.6 and above the 50 boom-bust reading. But for the first quarter as a whole, growth was the weakest since manufacturing embarked on the road to recovery in the autumn of 2003.

Howard Archer at Global Insight said: 'It is clear that the sector is still struggling to regain significant upward momentum after faltering in the second half of last year.

'Its continuing softness is another reason for the Bank of England to be wary about raising interest rates again in the immediate future.'

Rates are expected to be frozen at 4.75% when the Bank's monetary policy committee meets next week.