Airlines were not the only ones to suffer from increases in fuel prices, a survey has revealed.

The soaring cost of oil helped slow manufacturing growth last month, according to the Chartered Institute of Purchasing and Supply (CIPS) purchasing managers' index.

Higher energy costs were among factors that resulted in a cooling of new business levels in August compared with July, the study showed.

Customers using up existing stock and the impact of exchange rate fluctuations also contributed to the reduction.

But the index stayed in positive territory, at 53.1 against 56 last time. Any reading over 50 signals growth.

Roy Ayliffe, CIPS director of professional practice, said continued output growth and orders in August were set against weaker production and a cooling in new business.

He said: "Panellists faced intense pressure from the soaring cost of oil and commodities and reported raising their rates as a result in order to pass costs on to customers."

The London-based Centre for Economics and Business Research said the figures showed the UK manufacturing economy had expanded for the 14th month in a row, albeit at a slower rate.

It said: "The sector still shows a stable performance, a sustained growth in both output and new orders, as well as another rise in net staff numbers."

The seasonally adjusted CIPS output index stood at 53.5 against 58.8 in July, showing manufacturers were relying on stockholdings to satisfy demand rather than incurring higher energy costs through fresh production.

Meanwhile, the new orders index fell to 53.5 from 57.9 previously, indicating that manufacturers' customers were also running down stock levels.

Other factors impinging on order books in August included the impact of exchange rates on the competitiveness of UK manufactured goods.

Thursday September 02, 2004