Disappointing output figures revealed

Manufacturing News, Source : The Manufacturer
Published : 09 Dec 2005 10:58

Manufacturing output decreased by 0.3 per cent in the three months to October compared with the three months to July, with eight out of the 13 subsectors showing decreases in output and five showing increases.

There were significant decreases in the food, drink and tobacco industries, where output decreased by 2.0 per cent and the paper, printing and publishing industries, where output decreased by 1.6 per cent. There were also two significant increases on the three-monthly basis. In the chemicals and man-made fibres industries output increased by 1.4 per cent and in the electrical and optical equipment industries output increased by 1.3 per cent. Overall production decreased by 1.1 per cent on a three-monthly basis.

Between September and October, manufacturing output decreased by 0.7 per cent. Ten of the 13 subsectors showed decreases in output and only three showed increases. There were three significant decreasing subsectors in October. These were the transport equipment subsector (-2.7 per cent), the electrical and optical equipment subsector (-1.8 per cent) and the paper, printing and publishing subsector (-1.2 per cent). There were no significant increases in output between September and October.

The overall Index of Production decreased by 1.0 per cent between September and October.

Commenting on the ONS Manufacturing (Index of Production) figures for October 2005, Andy Martin, national director of manufacturing at Barclays, said: “The manufacturing sector will be very disappointed by these figures. While the international situation is improving, with a recent improvement in export order-books, the domestic situation is clearly less positive. The sector will be looking closely for signs of renewed consumer demand in the next few months, which could provide a much-needed boost for UK manufacturing."

British Chamber of Commerce (BCC) economic adviser David Kern said: "Today's manufacturing output figures were very disappointing, and much worse than the markets expected. The manufacturing sector's persistent failure to sustain a meaningful recovery, and the growing risk of renewed manufacturing recession, is a cause of acute concern. The BCC's economic forecast, which signalled already negative growth of 0.3 per cent in manufacturing output for 2005 as a whole (even if we assume a gradual improvement from now onwards) is now pointing to an even larger 2005 fall of 0.5-0.6 per cent. The manufacturing sector's acute underlying weaknesses, and the risks to the economy highlighted in yesterday's Pre-Budget Report, reinforce our view that the authorities must act forcefully to prevent a worsening in the economic situation. The Chancellor must remove the threat of further tax increases on business. We also believe that we need further interest rate cuts in the very near future. The financial markets do not expect a repo rate cut on Thursday, but we strongly urge the MPC to act without undue delay. The economy is weakening, and confidence is faltering. Alleviating the plight of manufacturing, and countering the downward pressures on the economy, are now key priorities."

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