Biggest slump in manufacturing output for 35 years

Manufacturers endured their biggest quarterly slump in output for 35 years in the three months to December, official figures showed today.

Industry output in the final quarter of 2008 was 5.1 per cent below the July to September period - the worst since 1974, according to the Office for National Statistics (ONS).

The figures also showed a 2.2 per cent fall in output in December on the previous month among manufacturers - representing a tenth successive month of decline in the worst run for the sector since 1980.

The December fall was even worse than already pessimistic predictions.

Jonathan Loynes, of Capital Economics, said: "The figures maintain the picture of unrelenting gloom in the manufacturing sector.

"The real worry, though, is that the various surveys suggest that things are set to get even worse over the coming months, with no signs at all that the drop in the exchange rate is yet boosting manufacturers' export order books."

The biggest quarter-on-quarter falls were in metal processing and manufacturing and transport equipment, which includes the crisis-hit car industry.

The Bank of England yesterday slashed interest rates to a new record low of 1 per cent to combat deepening recession as the UK's economic woes mount.

David Kern, chief economist at the British Chambers of Commerce, said: "The worse-than-expected production figures confirm that there is no sign as yet that the recession is easing."

He added that the figures were worse than implied by January's fourth quarter GDP figure, which showed a recession-confirming 1.5 per cent decline between October and December.