The UK's manufacturing sector contracted for the 10 consecutive month in January and at a slightly faster pace than in December, according to figures from the Chartered institute of Purchasing and Supply (CIPS).

The CIPS purchasing managers' index fell to 42.4. the third lowest reading in the survey's seven-year history.

The index stood at 42.8 in December. A reading below 50 indicates contraction, while above 50 indicates expansion.

Tne figures wall add to pressure for tile Bank of England to cut interest rates when i t meets, this week

“The data are softer than expected and should underpin hopes 'or a Bank of England rate cut on Thursday." said Jeremy Hawkins economist with the Bank of America.

Falling prices

Two of the five components of the index - output and new orders - pointedlo an easing in the rate of contraction In Jan-

However. the three other components - suppliers' delivery times, employment and stocks of purchases - all fell at a faster rate than in December.

CIPS said prices in-the sector. which accoun'tsifor some 20 per cent of total output in the

UK, fell at the fastest rate In the Survey's history.

The new orders index rose to 41.8 in January from 41.2 in December. the third consecutive monthly increase:

Tilt- report showed that although domestic demand remained weak. the rate of loss of export orders fell to the slowest rate rance last May. This was attributed to the boost to competitiveness from the recent fall in the value of sterling.

The pound has fallen around 7.5 per cent since its peak at the beginning of April last year.

There was also bad news on the job frcjtjp Employment fell for the 11 month in a row. with manufacturers shedding staff at a slightly faster rate than in December.

—BBC Internet