Manufacturing output sharply down

Manufacturing output fell significantly faster in October as the UK slides into a messy recession.

Between September and October, output of the manufacturing industries fell by 1.4 per cent, compared to a fall of 0.8 per cent last month, the Office for National Statistics (ONS) said.

This brings the annual fall in output to 4.9 per cent, the biggest drop since June 2002.

The fall was larger than expected and eight consecutive months of falls represents the worst slump in 30 years.

Howard Archer, economist with Global Insight, said: "Even allowing for the fact that the industrial sector only accounts for 18 per cent of the total economy, this increases the likelihood that there will be an extremely sharp contraction in GDP in the fourth quarter."

The acceleration in output falls suggest further interest rate cuts are likely and heightens concerns about the length and breadth of the recession, according to Dr Archer.

Activity fell across all industries but over the last three months, the most significant decrease was 4.6 per cent in the transport equipment industry.

New car sales have slumped and many car manufacturers have cut back on production, while Jaguar, Land Rover and Aston Martin have announced redundancies.

With economic data appearing so morbid, David Kern, chief economist at the British Chambers of Commerce (BCC), is calling for more interest rate cuts.

He said the figures show the "dismal circumstances facing the sector" and stated an export-led recovery fueled by a low pound was unlikely as the world falls into recession.

"The MPC must persevere with further interest rate cuts and take steps towards quantitative easing," he said.

"Unless the economic situation improves in the next few weeks, there is a very strong case for the MPC to cut rates by one per cent in January."