Work on new and existing contracts led to a solid increase in UK manufacturing output in March. Over Q1 2011 as a whole, output growth was the fastest since Q3 1994. However, the latest survey period saw the rate of expansion slip to a five-month low, mainly reflecting a sharp slowdown in new order growth.

Incoming new orders rose at the weakest pace since last October. Companies continued to report higher order intakes from domestic and overseas clients, but noted that inflows from both sources were less marked than in recent months. The extent of the easing was centred on the domestic market, particularly in the consumer goods sector.

Rates of expansion also eased for output and new orders in the intermediate and investment goods sectors, although to much lesser degrees than signalled for consumer goods producers.

Growth of new export orders was only slightly less marked than February's near series record peak in March. Companies reported improved demand from the USA, Asia, the Middle East and Russia.

The ongoing recovery in the sector encouraged further job creation in March. Employment has risen throughout the past year. Staffing levels increased at the second-fastest pace in the survey history and to only a slightly lesser extent than the previous month's record peak. Solid jobs growth was signalled in the consumer, capital and intermediate goods sectors.

Average input prices rose for the nineteenth month running in March, with the rate of increase easing only slightly further from January's survey peak. Higher average costs reflected increased prices for chemicals, cotton, energy, food products, fuel, metals, oil, timber and other commodities.

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