Triple-dip fears as manufacturing falls

Group Business Editor

Saturday 12 January 2013

FEARS that the UK economy is heading for a "triple-dip" recession have intensified after official figures revealed an unexpected fall in manufacturing output.

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Ian mcconnell business editor

The grim manufacturing figures were the latest of a slew of gloomy indicators which signal the UK could be suffering another relapse.

The independent National Institute of Economic and Social Research think tank estimated yesterday, in the wake of the manufacturing data and separate official figures which highlighted the weakness of the construction sector, that UK gross domestic product would have fallen by 0.3% in the fourth quarter.

UK manufacturing output fell by a further 0.3% month-on-month in November, defying City expectations of a 0.5% rise, figures published yesterday by the Office for National Statistics revealed.And broader industrial production showed only weak growth in November, in spite of the biggest month-on-month leap in oil and gas extraction since January 1968. The ONS attributed the jump in oil and gas extraction partly to the re-start of production at a key North Sea field in November, after a longer-than-usual maintenance shutdown.The fall in manufacturing output in November followed a 1.3% slide in October. Comparing the September to November period with the previous three months, manufacturing output was 0.7% lower. And manufacturing output in November was down 2.1% on a year earlier.Separate figures published yesterday by the ONS showed the volume of UK construction output in November was down 9.8% on the same month of 2011. Vicky Redwood, chief UK economist at consultancy Capital Economics, said: "November's disappointing UK industrial production and construction figures provided yet more evidence that the economy probably contracted in the fourth quarter of last year."The UK's recovery from the deep recession of 2008/09 proved short-lived. The economy fell into double-dip recession – contracting during the period from October 2011 to June 2012 – before temporary factors helped it rebound in the three months to September. To meet the technical definition of a triple-dip recession, GDP would have to fall both in the fourth quarter of last year and in the opening three months of 2013. Recession is generally defined as two consecutive quarters of contraction,Between the UK's 2008/09 and October 2011 to June 2012 recessions, GDP fell in a single quarter in the final three months of 2010.Noting that UK GDP in the third quarter of 2012 had been boosted by temporary factors, the NIESR said: "Removing these distortions suggests an underlying economic performance that is best described as flat."The ONS figures showed that industrial production, which includes mining and quarrying, oil and gas extraction, and electricity, gas and water supply as well as manufacturing output, rose only 0.3% month-on-month in November.This was adrift of the 0.8% rise forecast by economists, and followed respective monthly falls of 2.1% and 0.9% in September and October.Although oil and gas extraction was up 11.3% month-on-month in November, the ONS figures showed that it was down 17.8% on a year earlier.

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Triple-dip fears as manufacturing falls

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