Last updated: December 7, 2012 12:04 pm

Manufacturing data stoke triple dip fears

The woes of UK’s manufacturing industry were highlighted on Friday by a dire set of official data, which showed the sector had performed far worse than expected in October.

Manufacturing output, which makes up just over a 10th of the economy, was 1.3 per cent lower in October than in September, and 2.1 per cent lower than in October 2011. Analysts had on average expected the sector to fall 0.2 per cent, both during October and over the course of the past 12 months.

The broader index of production dipped 0.8 per cent between September and October. Production output was 3 per cent lower than it was in October 2011.

The poor figures will add to fears that the economy will shrink in the fourth quarter.

“Triple dip watch starts here,” said Alan Clarke, economist at Scotiabank.

“We were far more pessimistic than the consensus and clearly we weren’t pessimistic enough,” Mr Clarke added.

The dire manufacturing data come after trade figures released on Thursday showed that the trade deficit had widened from £2.5bn the previous month to £3.6bn in October, damping hopes that a rise in exports could boost the UK economy.

The Office for Budget Responsibility on Wednesday delivered the bad news to George Osborne, chancellor of the exchequer, that the UK economy was likely to shrink in 2012. The independent fiscal watchdog downgraded its economic forecast for this year from its spring estimate of growth of 0.8 per cent to a slight contraction of 0.1 per cent. The OBR also joined the Bank of England in ruling out the possibility of a revival of the UK’s economic fortunes over the next few years.

“Judging by the official data that we have seen for the fourth quarter so far, notably retail sales, trade and industrial production, the UK will struggle to avoid a renewed downturn after the brief return to growth seen in the third quarter,” said Chris Williamson, economist at data analyst Markit.

Manufacturing output fell across the board, with nine of the 13 industries covered by the Office for National Statistics data shrinking. Manufacturing of chemicals and related products has plunged 9.4 per cent over the past year. The manufacturing of wood and paper products and those of rubber and plastic products fell by similar amounts.

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