Manufacturing output still falling

Last Modified: 07 Oct 2008
Source: PA News

Output in the UK manufacturing sector fell for the sixth consecutive month in August to record its longest period of decline for 28 years, official figures show.

The Office for National Statistics (ONS) said manufacturing output dropped 0.4% during the month, double the 0.2% drop expected by analysts. The last time output fell for six months in a row was between July and December 1980.

Falling production of transport equipment such as motor vehicles was the main drag on industry between July and August, the ONS said, down 2.3% during the month.

Data on Monday showed sales of new cars plunged by 21.2% last month, the worst performance since 1991.

Paul Dales, at Capital Economics, said August's manufacturing contraction, which was 1.9% lower than a year ago, meant the sector was on course to shrink by 1.1% between July and September and "provided further evidence that the UK probably entered a recession in the third quarter".

The ONS's overall index of production for August - which measures wider industrial output including oil and gas output - was down 0.6% on the previous month and 2.3% on the year.

As well as declines for manufacturing, mining and quarrying production fell back along with electricity and gas supply and major machinery production.

Global Insight economist Howard Archer said: "Sharply contracting industrial production in August adds to the current stream of weak data and survey evidence on the UK economy and reinforces belief that the economy contracted in the third quarter and is well on its way into recession."

He called for the Bank of England's Monetary Policy Committee (MPC) to slash interest rates by 0.5% later this week, a move also called for by the CBI on Monday.

The British Chambers of Commerce (BCC) warned that the UK was already in a recession - defined as two successive quarters of negative growth - with business confidence, profits and turnover now at record lows.

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