THE impact of soaring energy bills on UK manufacturers was laid bare yesterday in a survey showing another month of job losses and heavy cost-cutting.

Operating margins were squeezed by the increased cost of fuel and other commodities, such as metals, chemicals and plastics.

The spiralling costs and lack of demand from abroad saw factory unemployment increase for an eleventh month in succession as companies sought cost savings from improved efficiency, according to the survey, by the Chartered Institute of Purchasing and Supply (CIPS).

It came as the CIPS barometer for activity in the manufacturing sector fell marginally from 51.8 in January to 51.7 last month, with any figure above 50 representing growth.

Last month was the seventh in succession of expansion, but economists said the slower growth rate was unexpected and disappointing.

HSBC economist John Butler said: "For UK manufacturers, volume growth remains fragile, while margins are being squeezed - still a nasty picture."

The slower rate contrasted with strong increases in the eurozone, where the index was up from 53.5 in January to 54.5 last month.

A figure of 65.7 on the CIPS index measuring input prices represented the fastest rate of inflation in costs since January last year.

Although selling prices at the factory gate also increased at the sharpest pace for a year, it remained well below that of input costs, at 54.1.

With the rate of growth for new orders easing due to a sluggish export market, a reading of 47.6 on the employment barometer signalled job cuts for the eleventh successive month.

Roy Ayliffe, director of professional practice at CIPS, said it was another subdued performance by the UK manufacturing sector, while Royal Bank of Scotland chief economist Dr Andrew McLaughlin branded it uninspiring.

"Although output growth was sustained, the continued lack of an upswing in export orders to support further expansion is placing too high a reliance on still relatively subdued domestic markets," said Dr McLaughlin.