UK manufacturing output stagnates unexpectedly in October

Published: 11:58AM GMT 08 Dec 2009

The lack of growth disappointed expectations of a modest rise, while wider
industrial output including mining and utilities was also flat over the
month.

September's bounce back from a 2pc fall in manufacturing output during August
was also revised
down to 1.5pc by the Office for National Statistics (ONS).

IHS Global Insight's Howard Archer said: "This highlights the fact that the UK
still faces a difficult battle to develop a sustainable, significant
recovery."

The figures showed rises for chemicals, machinery and equipment firms
cancelled out by falling output among electrical manufacturers as well as
printing and publishing firms.

Manufacturing output overall was 7.8pc below a year earlier - an improvement
on September's figure but nonetheless representing an 18th successive month
of year-on-year decline.

Mr Archer said: "Serious doubts remain about the strength of demand for
manufactured goods over the medium term, particularly once stimulative
measures start being withdrawn."

Adding to the gloom about the economy,
the CBI's
monthly industrial trends survey suggested that while British
factory orders fell at their slowest pace in a year in December,
manufacturers were pessimistic about the future.

The survey's total order book balance improved to -42 from -45 in November.
That was slighty better than the consensus forecast of -43 and the highest
reading since December 2008. However, the output expectations balance fell
to -7, its weakest since July, from +4 in November.

"Order books remain very weak and firms now expect production will fall back
slightly in the next few months," said CBI chief economics advisor Ian
McCafferty.

"This highlights the fragility of the recovery and the likelihood that
economic activity will continue to bump along the bottom early next year."

Uncertainty over manufacturing prospects has also been seen in recent survey
data, with the Chartered Institute of Purchasing & Supply's closely-watched
activity index signalling slowing growth in November.

UK firms have been helped by a weaker pound, record low interest rates and
measures such as the scrappage scheme to boost the flagging car industry,
but tax hikes and spending cuts loom next year to threaten recovery.

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