Business leaders in Birmingham and Solihull today urged the Bank of England to step up their money supply programme later this week following a surprise fall in manufacturing output during August.

Despite an upturn in manufacturing prospects revealed in Chamber of Commerce surveys across Birmingham and the West Midlands, the Office for National Statistics (ONS) said output slid by 1.9 per cent in August after two months of growth. This confounded expectations of a 0.4 per cent rise.

Katie Teasdale, head of policy at Birmingham Chamber of Commerce and industry (BCI), said: "These conflicting reports underline the fragile state of the economy and the vulnerability of manufacturing in particular.

"Chamber surveys in Birmingham and the wider West Midlands indicate that the manufacturing sector is fighting back from the depths of recession. 

"Also the ONS's three-monthly figure to August showed no change in manufacturing output compared to the previous quarter. This was more in line with our encouraging statistics but the slump during August - the latest national figures available - is worrying.

"Our own surveys indicated that both home and export sales had increased in the third quarter and forward orders were also up.

"The national figures again underline that the government's quantitative easing programme has not gone far enough. We urge the Bank of England to consider boosting money supply when they meet this week to reduce bank lending concerns."

Manufacturers and suppliers in the automotive sector were encouraged today by figures for September which show that new cars sales were 11.4 per cent up on a year ago. This was largely attributed to vehicle scrappage scheme. 

Said Ms Teasdale: "The government's decision to inject a further £100 million into the scheme is timely and appears to be having a positive impact on all manufacturers."