UK manufacturing output falls further than expected

Manufacturing output in the UK has fallen more sharply than initially predicted for December, defying analysts’ expectations and prompting increased speculation about the long-term future of the sector.

With a decline of 0.7 per cent on November 2001, manufacturing production during December was down by 5.4 per cent in comparison to the same period in 2000.

While analysts had envisaged a fall of around 0.4 per cent on the previous month, the decrease has only served to reinforce the feeling that the sector’s economy is a long way from recovery.

While many factors are playing a part to drag manufacturing output down, the euro’s apparent instability against the pound is only set to increase the sector’s woes, with the global economic slowdown sharply cutting export orders worldwide.

A series of cuts in interest rates have yet to spark life into the industrial economy, and instead have fuelled a high street spending spree that could create a financial imbalance the government may have to move swiftly to correct.

In addition, rising unemployment in the manufacturing sector could begin to affect the service sector, which, in the UK, has so far resisted the downturn affecting most other industrialised countries. (CL)