Manufacturing worst in 28 years

Source: Exec Digital UK

Date :08/10/2008 09:45:12

According to the Office for National Statistics (ONS) the UK’s manufacturing sector is in the longest period of decline for 28 years.

ONS statistics show that output in the manufacturing sector dropped 0.4 percent in September, double the drop analysts expected.

"Sharply contracting industrial production in August adds to the current stream of weak data and survey evidence on the UK economy and reinforces belief that the economy contracted in the third quarter and is well on its way into recession," said Howard Archer, Chief Economist at Global Insight.

Despite the weakening pound, demand in export markets is also dropping. Meanwhile domestic demand is also muted, with transport taking the hardest hit, registering a 2.3 percent fall.

According to Paul Dales at Capital Economics, the manufacturing contraction in the last quarter "provided further evidence that the UK probably entered a recession in the third quarter."

"The news on the manufacturing sector is relentlessly bad at the moment, indicating that the sector's downturn is deepening” said Howard Archer, an Analyst with Global Insight. “The Bank of England should respond with a 50 basis point interest rate cut."

David Kern, Economic Advisor with the BCC concurred: "while it is wrong to exaggerate the gloom, early action is needed."