UK manufacturing was surprisingly strong in August but still posted its fourth straight month of contraction.

The Purchasing Manager's Index (PMI) rose to 49.5, from 45.2 in July, only slightly below the 50 mark that separates expansion from contraction.

The figure was a four month high and better than the PMI reading of 46 pencilled in by analysts.

It was also stronger than statistics from the Eurozone, which showed a reading of 45.1, which was weaker than expected.

An improvement in output was driven by consumer goods producers, while intermediate goods companies also saw a marginal return to growth.

There was a broad stagnation of new orders but this was a marked improvement on the severe decline seen in July as companies reported a modest increase in new work from domestic clients.

The rate of decline in new export orders also eased sharply, despite weak demand from Europe.

Manufacturing employment rose slightly for the second successive month in August.

Payroll numbers were increased at SMEs, but continued to fall at large-scale producers.

The PMI figures came just after manufacturers' body, the EEF, reported that over the past quarter the UK's manufacturers had seen some of the toughest trading conditions since the end of the recession.

Rob Dobson, Senior Economist at Markit, which compiles the PMI, said overall demand remained too lacklustre to provide an imminent and sustained recovery, with investment spending still weak and domestic austerity ongoing.

"Long unsatisfied hopes that the manufacturing sector could export its way back to health also remained jilted by the marrying of a downturn in our largest export market to the onset of softer global economic growth," he said.

"The performance of the sector is therefore likely to remain subdued and volatile until underlying structural imbalances are resolved."

Samuel Tombs, UK Economist at Capital Economics added his downbeat voice, saying the survey evidence suggested that it was highly unlikely that the manufacturing sector would play a significant role in the overall economy's return to growth in the third quarter.

In the Eurozone, business conditions deteriorated in almost all national manufacturing sectors covered by Markit's survey, with the sole exception being Ireland.

Downturns in Germany, France, Spain, the Netherlands and Greece all eased during August, but accelerated in Italy and Austria.

Greece remained rooted to the foot of the Eurozone PMI league table.

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