Manufacturing output plunged 2.9% in June

Group Business Editor

Wednesday 8 August 2012

UK manufacturing output plummeted by 2.9% month-on-month in June, and dropped by 0.9% in the second quarter, official figures have revealed.

WORRYING SIGN: While the Jubilee bank holiday had an impact, analysts say the figures point to a weakness in the sector. Picture: Jeff J Mitchell

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IAN MccoNNELL business editor

Wider industrial production, which includes mining and quarrying, oil and gas extraction, and electricity, gas and water supply as well as manufacturing output, fell by 2.5% month-on-month in June to its lowest level for more than 20 years.

The grim, seasonally-adjusted manufacturing output and industrial production figures from the Office for National Statistics highlight the deepening of the UK's double-dip recession in the second quarter.They also cast further doubt on Chancellor George Osborne's vision of a "Britain carried aloft by the march of the makers", which he offered in his March 2011 Budget.While some of the month-on-month tumble in manufacturing output was the result of the late May bank holiday being moved into June, and the additional holiday for the Queen's Diamond Jubilee, economists highlighted the fact that the data pointed to significant underlying weakness in the sector.And a survey from the Chartered Institute of Purchasing and Supply last week signalled manufacturing's woes continued into July. CIPS' survey showed UK manufacturing output fell in July at its fastest pace for 40 months.The ONS noted the drops in manufacturing output and industrial production in June were the steepest since autumn 2008.The ONS had, when it estimated last month that UK gross domestic product tumbled by a further 0.7% in the second quarter, estimated that industrial production fell by 1.3% during this period. It said yesterday that industrial production dropped by 0.9% in the second quarter.The ONS noted the reduced contraction in industrial production would, other things being equal, cut the drop in GDP in the second quarter by about 0.07 percentage points. But this would do nothing to change the picture of a sharp acceleration in the UK economy's rate of decline during the three months to June. The fall in UK GDP during this period was the third straight quarterly fall.Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "Industrial production was dire in June as it took a major hit from the two days' public holiday... related to the Queen's Diamond Jubilee."While noting the second-quarter GDP fall could be "trimmed modestly", he added: "This does not fundamentally change the story of a struggling economy and July survey evidence from the purchasing managers suggests that the manufacturing sector is continuing to find life very difficult in the face of strong domestic and global headwinds."Samuel Tombs, UK economist at consultancy Capital Economics, said: "June's industrial figures suggested that the drop in GDP in Q2 is likely to be revised to a slightly smaller fall. But the figures did not change the overall picture of a sector struggling to grow in response to rapidly weakening overseas demand."Mr Tombs noted that industrial production in June was at its lowest since May 1992.The independent National Institute of Economic and Social Research estimated, in the wake of the industrial production data, that UK GDP in the May to July period was down 0.2% on the preceding three months.

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Manufacturing output plunged 2.9% in June

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