THE economic recovery got a “reality check” yesterday when data showed weaker-than-expected manufacturing output, a sharp fall in the construction sector, and a slowdown in retail sales growth.
Economists said growth in the fourth quarter might now struggle to keep up the pace which has made Britain one of the fastest-growing economies among the world’s rich nations.
Official data was not seen matching up with strong industry surveys.
Output for both manufacturing and industrial production was flat month-on-month in November, and October’s increases were revised down, the Office for National Statistics said.
The data was “something of a reality check for those getting a little carried away by the strength of the UK recovery”, said James Ashley, senior economist with Royal Bank of Canada Capital Markets.
HSBC’s Simon Wells said Friday’s data could reduce growth in the fourth quarter to 0.6 per cent from 0.8 per cent in the July-September period, unless there is a very strong performance from the dominant services sector.
Bad weather in December could also weigh on gross domestic product, he said.
Sterling fell and 10-year gilt yields touched their lowest level since December 19.
The ONS also said output in the construction sector shrank by 4 per cent in November from October, its sharpest fall since June 2012 and a setback for a sector which has been recovering from a long slump.
Mr Ashley said the figures served as a reminder that a rise in the cost of borrowing is still same way off.