Manufacturing output down 1.4% in Q2, longest double-dip since ’50s

Posted on 25 Jul 2012

Official government figures show that the UK economy shrank by 0.7% in the second quarter of 2012, worse than expected. Manufacturing output fell by 1.4% in the quarter.

The Office for National Statistics has confirmed that GDP fell by 0.7% in the three months to June 2012.

Manufacturing production shrank by 1.4%, a far bigger change than expected, following a brisk first quarter for several manufacturing sub-sectors.

The economy was affected by the Queen’s Jubilee, which led to one fewer working days in the quarter.

The construction sector was badly affected, where output decreased by 5.2% in Q2 compared with Q1 2012. Output in construction has already fallen 4.9% between Q4 2011 and Q1 2012.

The fall means the double dip recession is the longest in the UK since the 1950s.

Manufacturing body EEF’s Lee Hopley said the Jubilee hiatus was less powerful than some suggested.

“It is very unlikely that the monthly drop in output in June implied by the figures gives a fair reflection of the underlying health of the sector. Extended shutdowns over the bank holiday period will have hit output over the quarter, but as National Statistics points out we saw an even greater impact during the last jubilee a decade ago.”

CBI Director-General John Cridland said the figures, that indicate no growth in H1 2012, were very disappointing.

“When I talk to businesses on the ground, however, the overwhelming view is that right now the economy is flat rather than negative, and there is potential for Britain to get back into growth later in the year, ” he said.

The CBI’s own quarterly industrial trends survey indicated that manufacturing growth was  steady for the same period.

The survey of manufacturers revealed that optimism about the general business situation was broadly stable relative to the previous three months (-6%).

Of the 398 manufacturers responding to survey, 29% reported that total orders had increased in the three months to July, while 26% said that they had fallen.

Ian Brinkley, director of The Work Foundation expected unemployment to start to rise again. “The government needs a credible plan to give the private sector the confidence to invest and innovate,” he said.