Output data signals weak start to fourth quarter

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The Independent Online

Britain's industrial output failed to grow in October and manufacturers expect it to fall in the coming months, denting hopes that the economy is set to bounce back in the final three months of the year.

Both industrial and manufacturing output remained flat in October, the Office for National Statistics said yesterday, confounding expectations of a modest rise and suggesting that the economy made a weaker-than-expected start to the fourth quarter. September's figures were revised downwards, implying a modest worsening of the picture for the quarter.

"In truth, these figures are disappointing," said Philip Shaw, the chief economist at Investec. "We had hoped for a rise in manufacturing. The recovery is likely to be shallower."

Richard McGuire, of RBC Capital Markets, was also unimpressed by the data, warning: "These numbers caution against expecting much in the way of growth impetus from the production sector heading into the end of this year."

Hopes of recovery were also hit by the Confederation of British Industry's latest industrial trends survey, which found that 25 per cent of manufacturers think output will fall in the next three months, while 18 per cent anticipate a rise. The net balance of minus 7 per cent is the lowest since July.

"Manufacturing prospects were starting to look up but have dipped again in this latest survey," said the CBI's chief economist, 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."

However, the National Institute of Economic and Social Research offered faint hope that recovery was still on the cards. Its estimates of gross domestic product suggested that UK output grew by 0.2 per cent in the three months to 30 November, compared with a 0.3 per cent decline in the quarter to October.

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