Manufacturing output is at its lowest level in three years, in what could be a further blow to hopes for a swift economic recovery, according to the Confederation of British Industry (CBI).
Of the manufacturers surveyed by the employers' group, just 25 per cent said their output had increased in the three months to the end of October, while 28 per cent said output had shrunk. This was the worst ratio of contraction to expansion of output since October 2009 and was much worse than expected.
David Tinsley, an economist at BNP Paribas, described the CBI findings as "terrible", adding: "Any hope that the UK manufacturing sector would dodge the bullet from the weakness in the eurozone manufacturing sector looks forlorn."
The latest numbers from the eurozone are certainly weak, with Germany, a crucial driver of continental growth, seemingly taking a backward step in October.
The gloom from the CBI and the eurozone comes as the Office for National Statistics is expected to announce that the UK exited recession in the third quarter. The ONS's first estimate of GDP today could see growth as high as 0.5-0.8 per cent, according to some commentators, in the three months to the end of September. However, much of any positive growth could be attributed to the reversal of one-offs such as the Olympics.
Howard Archer, UK economist at IHS Global Insight, said: "Looking through the distortions to GDP in the second and third quarters, the likelihood is that the economy is eking out limited growth."
Mr Archer is predicting that the Bank of England could announce another round of quantitative easing as early as November.Reuse content