ONS figures released yesterday revealed a sharp dip in manufacturing output. After predictions that output would fall by 0.3% in April, the official figure was 0.8%.
The figures show the fastest decline in manufacturing output for over two years, provoking fears that the fragile British economy’s recovery is beginning to grind to a halt. The number of bank holidays in May and the knock-on effects of the crisis in Japan are thought to be main factors causing the dip, but the dip far outstrips any predictions that came from the City.
Chris Williamson, chief economist at information group Markit, said: “Temporary factors aside, a downward underlying trend in the growth rate of the manufacturing sector is very evident.”
The Chancellor George Osborne has his fingers crossed for manufacturing will help to rebuild and rebalance Britain’s economy but the Office for National Statistics (ONS) said that output from the manufacturing sector was just 1.3% up on a year ago.
The most damaging event was the crisis in Japan, a major hub for the manufacturing of cars. However, production in Japan is not in any way limited to cars. Toyota warned that its profits will fall drastically by 31% this year, and management has said they are preparing to tumble from their status of being the largest car manufacturer in the world after the damage caused by the earthquake earlier this year. Nissan escaped relatively unscathed in comparison.
The events in Japan have now set America’s General Motors (GM) on the path to become the world’s biggest car manufacturer. GM comprises the brands and divisions: Buick, Cadillac, Chevrolet, GMC, Opel, Vauxhall, and Holden, as well as two ventures in China.
EEF has called for calm after the release of the figures from the ONS, as economist Lee Hopley said: “The manufacturing recovery remains on track as more recent surveys suggest that output and order remain strong. Short-term supply-side impacts of the royal wedding, bank holidays, and the [Japanese] tsunami will have masked sustained demand from export markets and suggest a rebound in activity in the coming months.”