Manufacturing slump – As we feared?

My gut feeling that the Manufacturing sector was taking a battering have sadly been confirmed with publication of the latest figures from the ONS.

The Times reports today: “Sterling plunged further against the dollar after official figures revealed British manufacturing output unexpectedly fell in January at its sharpest monthly rate since last August. The Office for National Statistics (ONS) said output had declined by 0.9 per cent at the beginning of the year, compared to December, marking the biggest drop since last August and falling far below analysts’ expectations for a rise of 0.3 per cent. However, comparing January to the same month last year, output rose by 0.2 per cent.”

There is speculation that poor weather played a part in this, but there’s also speculation that the Q4 improvement last year was solely due to restocking. I fear it was the latter, in which case prepare for the inevitable political invective as Gordon will have to run very hard for his money! Time will shortly tell if it is, however, I’m very keen for readers to share their thoughts on the possible causes – and possible cures.

One Response to “Manufacturing slump – As we feared?”

1. Mike Barnett Says:
   March 12th, 2010 at 7:59 pm

   Yes, discounting for bad weather your pessimism may well be justified.

   It’s interesting though, you mentioned the 0.2% year-on-year manufacturing rise in January which the BBC is somewhat triumphalist about as it is it’s first year-on-year rise since March 2008. The ONS said that as well as the harsh weather being a factor, some firms had reported they had rushed to complete orders in December before January’s rise in value added tax. The EEF, said that the output figures were “surprising given the raft of other survey data since the beginning of the year which has been more upbeat and the underlying trend is one of growth and the continued recovery in the world economy should underpin this in the months to come”. In addition, European industrial output as a whole rose the most in two decades in January. The Prime Minister said: on 10 March, “It’s pretty obvious what’s happening. The European economy which is our major source of growth is not growing fast enough.” Admittedly though this was more in response to the fact that the UK trade deficit had widened to its biggest in 17 months.

   Plenty in the melting pot, particularly after the snow!

   Regards

   Mike

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