New figures show shock fall in manufacturing

 

Hopes of an end to Britain's recession woes were dashed today when official figures showed that the manufacturing sector suffered a shock fall in output during April.

The Office for National Statistics (ONS) revealed a 0.7% drop in manufacturing output between March and April - an unexpected disappointment after the 0.9% rise the previous month.

Wider industrial production output remained unchanged in April, but this was largely helped by a boost from energy output caused by the cold weather as Britons turned up the central heating.

Alan Clarke, economist at Scotiabank, said the chilly weather saved the UK from an industrial production "bloodbath".

The data is expected to reinforce demands for the Bank of England to increase quantitative easing (QE) to help the UK's ailing economy.

Most experts had forecast an unchanged reading for manufacturing output in April, while the data had been expected to show a slight rise across industrial production as a whole.

Mark Lee, head of manufacturing at Barclays, said: "The harsh realities are hitting home.

"UK manufacturers are focusing on achieving greater cost efficiencies as orders from our biggest trading partner, Europe, remain flat at best."

The ONS said manufacturing data was dragged lower by falls in pharmaceutical products and preparations, as well as in other manufacturing and repair.

In the wider industrial production sector, a 13.6% month-on-month surge in electricity and gas usage during the coldest April since 1989 was offset by a 6.4% fall in oil and gas extraction caused by the closure of a North Sea platform after a gas leak.

Manufacturers' organisation EEF called today's figures "disappointing", with production now hovering around levels seen at the end of 2010.

Samuel Tombs, at Capital Economics, said the manufacturing sector was set to continue holding back economic recovery in the UK.

He added: "Given that the eurozone crisis has intensified since April and recent manufacturing surveys have been very weak, it seems likely that the industrial sector will remain a drag on overall gross domestic product growth for some time to come."

Pressure is mounting on Bank of England policymakers to bolster Britain's prospects following the return to recession in the first quarter of the year.

Rate-setters held off from injecting more cash into the economy through QE last week.

But Monetary Policy Committee member Adam Posen yesterday called for further purchases of assets, such as company loans.

PA

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