Britain’s manufacturers facing a year of misery with malaise likely to continue

The ONS said the largest decrease in manufacturing output in November was pharmaceuticals, which declined by 4.9 per cent

The index of production is 1.2 per cent lower year on year (Getty Images)

Manufacturing output fell again in November, leaving the beleaguered sector on course for a full year of contraction. According to the latest snapshot from the Office for National Statistics, output slipped back by 0.4 per cent in the month, against City expectations of a 0.1 per cent increase.

The index of production is 1.2 per cent lower than it was a year earlier with one more month of 2015 output to be measured. Zach Witton of the manufacturers’ organisation the EEF predicted the malaise would likely continue.

“The significant build-up of risks throughout last year, linked to the slowdown in the global economy, loom large for manufacturers as we go into 2016, with no sign that slowing export demand, the strength of the exchange rate and volatility in major markets will soon ease,” he said.

The wider measure of industrial production – which accounts for 15 per cent of GDP – also dropped by 0.7 per cent, versus the flat reading analysts had pencilled in. The disappointing figures sent sterling down almost 1 per cent against the dollar to $1.44 as traders pushed back the expectations of the timing of the first rate rise from the Bank of England.

“The weakness in this report is the straw that breaks the camel’s back,” said Malcolm Barr of JP Morgan, as he pushed his own estimate of the first rate rise by the Bank’s Monetary Policy Committee back by six months to November.

The latest GDP forecast from the National Institute of Economic and Social Research for the final quarter of 2015 was for growth of 0.6 per cent, up from the official estimate of 0.4 per cent in the third quarter. That would mean total year growth of 2.2 per cent, down sharply from the 2.9 per cent expansion in 2014.

“The slowdown in the economy last year was largely due to a sharp moderation in growth of the construction sector and public spending, exacerbated by weaker net trade,” said Jack Meaning of Niesr.

The ONS said the largest decrease in manufacturing output in November was pharmaceuticals, which declined by 4.9 per cent.