Setback as factory output records a fall

Manufacturing output dropped 0.7 per cent in April after a 0.9 per cent rise in March, confounding forecasts for an unchanged reading, the Office for National Statistics said.

The fall prompted fears Britain’s double-dip recession could last longer than expected. The UK slipped back into recession at the end of March after two consecutive quarters of negative growth.

The wider reading of industrial output, which includes energy production and mining, was unchanged in April after a 0.3 per cent fall, but was lower than forecasts.

“(It is) a very disappointing start to the second quarter, with the monthly decline in manufacturing posing a genuine cause for concern,” said Nida Ali, economic adviser to the Ernst & Young ITEM Club.

“These figures do not bode well for growth in the second quarter, racking up the pressure on the Bank of England to ease monetary policy further. Last week’s decision is likely to have been finely balanced and it won’t take many more figures like this one to push them over the edge.”

The Bank of England last week kept interest rates steady and held its purchase of assets, known as quantitative easing, steady at £325bn.

“The UK economic recovery looks about stalled for now, which will place pressure on the government to quickly implement a plan for growth,” said Yorkshire Bank economist Tom Vosa.

Seven manufacturing sectors fell, with six rising. Pharmaceuticals manufacturers were the biggest contributors to the month-on-month fall in output, falling six per cent, followed by other manufacturing and repair, which fell by 5.1 per cent.