Fall in UK industrial output underlines weakness of economy

Weak performance by industrial sector suggests ONS may have to revise down 1% first estimate of third-quarter GDP growth

Output from British industry declined by 1.7% in September, underlining the continued weakness of the economy despite the ending of the double-dip recession.

The Office for National Statistics said maintenance on North Sea oil platforms led to a 15.3% collapse in mining and quarrying output in the month, contributing to the sharp fall in overall production.

Manufacturing, which the government sees as key to reviving the economy, eked out a gain of just 0.1% on the month, the ONS said.

The weak performance of the industrial sector suggested the ONS may yet have to revise down its 1% first estimate of growth in the third quarter. Tuesday’s figures showed that industrial output increased by 0.9% over the quarter, against 1.1% in that initial estimate of GDP.

City analysts said the weaker-than-expected figures suggested that the strong growth of the economy in the third quarter could turn out to be a blip.

“UK factory output barely rose in September and energy production slumped, adding to evidence that the country risks sliding back into another downturn after the temporary growth surge enjoyed in the summer,” said Chris Williamson, of data provider Markit.

However, manufacturers’ group the EEF was keen to point out that a number of industries, including pharmaceuticals, transport and electrical equipment all saw production rise over the month.

“A modest uptick in output in September points to some growth still out there for manufacturers, despite some of the weaker survey data recently,” said the EEF’s chief economist, Lee Hopley.

She urged George Osborne to build on this cautious optimism by offering “a clear vision from government at the autumn statement about the priorities for our economy and a plan to ensure growth stays on track”.

Howard Archer, of IHS Global Insight, said the worse-than-expected performance from industry might help tempt policymakers on the Bank of England’s monetary policy committee to extend its quantitative easing (QE) programme at their monthly meeting on Thursday.

“Signs that the economy is still struggling markedly despite the third-quarter GDP rebound keeps the door wide open to the Bank of England enacting more QE,” he said.

guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

via Latest financial, market & economic news and analysis | guardian.co.uk http://www.guardian.co.uk/business/2012/nov/06/fall-uk-industrial-output-weakness-economy

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Hi! I’m James and am passionate about my small businesses. A strong cashflow is vital for us so I will be curating the latest on cashflow and business news.

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