Manufacturing output falls again

Manufacturing's biggest slump in almost 30 years deepened today after a worse-than-expected 1.4 per cent fall in output during October.

October's dire performance represents the eighth successive month of decline in the worst run since 1980, according to the Office for National Statistics (ONS).

This leaves annual output 4.9 per cent down after September's figures were also revised lower.

Overall industrial production, which also includes the mining and utility sectors, fell 1.7 per cent between September and October, at the peak of the crisis in the banking sector.

Paul Dales, of Capital Economics, said "activity all but fell off a cliff" at the start of the final quarter of 2008.

This follows a 0.5 per cent drop in output between July and September - the first in 16 years - as the ailing UK economy lurches into recession.

"The recession is clearly deepening and the downside risks to our forecast that GDP will fall by 1.5 per cent next year are growing," said Mr Dales.

Declines across the manufacturing sector were widespread, with transport equipment the worst hit. Output from firms making vehicle bodies and parts was almost 15 per cent below the previous year in the three months to October.

Car sales have slumped amid worries over "big ticket" spending and yesterday Birmingham-based Wagon became the latest victim, calling in administrators to its UK business and putting 500 jobs at risk.

Meanwhile, output from brick and cement makers was nearly 22 per cent lower in the three months to October - reflecting the current slump in the housing market.

Bank of England rate-setters have slashed interest rates from 5 per cent to 2 per cent in the past two months in a bid to revive the struggling UK economy and experts suggested more cuts to come following today's figures, taking rates to an all-time low.

"We expect interest rates to fall to a low of 0.5 per cent in the second quarter of 2009 and then stay there for the rest of the year," IHS Global Insight economist Howard Archer said.