UK manufacturing output tumbled unexpectedly in October, official figures have shown, further highlighting the unbalanced nature of the economic recovery.
The Office for National Statistics said yesterday that manufacturing output had fallen by 0.7 per cent on a seasonally-adjusted basis in October. This drop was in stark contrast to economists' expectations of a 0.2 per cent rise.
A 4.5 per cent month-on-month drop in output of the computer, electronic and optical products sub-sector played a significant part in the fall in manufacturing output in October.
Broader industrial production, which includes mining and quarrying, oil and gas extraction, and electricity, gas and water supply as well as manufacturing output, fell by 0.1 per cent month-on-month in October. Economists had forecast a 0.2 per cent rise in industrial production.
Oil and gas extraction rose by 2.8 per cent month-on-month in October, to leave it up 0.2 per cent on the same month of last year.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "Manufacturing output fell 0.7% month-on-month in October which was a disappointing performance even allowing for the fact that this was partly a payback after an upwardly revised gain of 0.6% in September."
He added: "The weak start to industrial production in the fourth quarter increases the risk that GDP (gross domestic product) growth will ease back further after moderating to 0.7 per cent quarter-on-quarter in the third quarter from 0.9 per cent quarter-on-quarter in the second quarter."
Paul Hollingsworth, UK economist at consultancy Capital Economics, said: "October's industrial production data provided further signs that UK manufacturers
are struggling against a crippling combination of weak overseas demand and a
strong pound."
However, Mr Hollingsworth highlighted his belief that lower oil prices should help to reinvigorate the manufacturing sector recovery "in time".
He said: "The fall in oil prices from around $115 per barrel in June to
around $65 per barrel at present should provide a timely fillip to growth. Granted, UK
manufacturers have been compelled to pass on any cost savings to consumers
recently, so they are unlikely to be able to rebuild their margins. But lower prices
should still help to boost demand for their products."
Mr Hollingsworth added: "Whilst the recovery is currently dependent on the dominant services sector, we are hopeful that it will broaden out again to the manufacturing sector in 2015."
Figures for exports and business investment have consistently proved disappointing, with consumer spending having played a major part in the UK's belated recovery.
Chancellor George Osborne's vision of "a Britain carried aloft by the march of the makers", set out in his March 2011 Budget, has failed to materialise.
The National Institute of Economic and Social Research, an independent think-tank, estimated yesterday that UK GDP grew by 0.7 per cent in the three months to November. It had previously estimated growth ion the three months to October at 0.7 per cent.
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