UK manufacturing output took a tumble in April

Just as we were starting to see some healthy data from the UK economy, manufacturing figures come down like a ton of bricks...

by Michael Northcott
Last Updated: 19 Aug 2013

In a further blow to confidence in the national economy, figures from the Office for National Statistics (ONS) have revealed that factory output fell 0.7% in April. There had been hope that a return to form might be in the pipeline, after the 0.9% rise in output from February to March. But analysts have been disappointed. The steady rate forecast has turned out to be a steep fall instead...  

The worst falls across the manufacturing industry were in pharmaceutical and food, down 3% and 5.7% respectively. Not even the positive growth in aerospace and electronics, up 8.8% and 6.2%, could bolster the overall figure. 
The poor performance of the manufacturing sector has prompted the British Chambers of Commerce to call for another round of quantitative easing from the Bank of England (when extra money is injected into the economy to try and stimulate growth). The Bank’s governor, Mervyn King, has resisted this for some time now, worrying that the more QE could stoke up inflation, which would have knock-on negative impact on consumer spending. 

Things on the continent Spain spent the weekend negotiating bailout conditions for its crumbling banking sector, and whilst markets rode the wave briefly, 10-year bond yields for Spain have now hit a euro-era high of 6.81%. Meanwhile the EU is thrashing out plans for a pan-eurozone banking union that could come into effect as soon as 2013.  

Britain’s economy is not yet flagging in quite the same way, although it has just technically re-entered recession, with a contraction of 0.3% in the first three months of 2012. Well, at least Merv will be pleased that his ‘zig-zag recovery’ prediction for the UK economy is standing firm…

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