Surprise lag in UK manufacturing and production

Consensus has grown that the UK economy contracted in the fourth quarter after a disappointing fall in November’s manufacturing data.

The Office for National Statistics reported UK Manufacturing output fell by 0.3 per cent in November compared to the previous month, in spite of expectations of a 0.5 per cent gain. Activity fell 2.1 per cent from a year earlier.

Although total industrial production, including manufacturing, rose 0.3 per cent, a sharper rise of 0.8 per cent had been expected.

“November’s disappointing UK industrial production and construction figures provided yet more evidence that the economy probably contracted in the fourth quarter of last year,” Vicky Redwood, chief UK economist at Capital economics said.

Azad Zangana, European economist at Schroders, added he expected the economy to have shrunk towards the end of last year.

“Manufacturing of consumer durables and non-durables fell sharply, highlighting the recent fall in demand from consumers in both domestic and international markets,” he said.

Weak export markets particularly in Europe have hit demand, although the recent rise in sterling is likely to have exacerbated the situation. The figures support our view that the UK economy overall contracted in the fourth quarter.”