Drop in UK manufacturing output for November

UK Manufacturing

The UK’s manufacturing output fell by 0.3% from October to November 2012, and by 2.1% compared with November 2011, official figures showed today.

The decline in manufacturing adds to fears that the UK economy contracted in the final quarter of the year and economists have been airing concerns that the UK could be heading for an unprecedented triple-dip recession.

Chris Williamson, chief economist at Markit, said that although there are signs that the situation in manufacturing improved in December, a drop in activity in the far larger services sector, combined with forecasts for heavy snow for January, have raised the possibility that the economy could contract in the first quarter of 2013.

November’s decline in factory output was announced on the same day that Honda revealed it would be cutting 800 jobs at its Swindon plant.

The Japanese carmaker blamed the job losses on low demand in European markets but stressed that it was still committed to manufacturing in the UK.

Overall, the UK’s industrial production rose by 0.3% in November compared with October, boosted by an increase of 8.7% in mining & quarrying and a smaller increase of 0.6% in the water & waste management sector. These rises were partially offset by the 0.3% drop in manufacturing and a decrease of 4.1% in the energy supply sector.

Compared with November 2011, the index of production fell by 2.4% in November 2012. The Office for National Statistics pointed out that this is the 20th consecutive monthly fall on the same month a year ago.

David Kern, chief economist at the British Chambers of Commerce, described the manufacturing figures as disappointing. He said that a decline in GDP for the fourth quarter is not inevitable, but overall the picture remains one of stagnation in the UK economy.

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