UK's industrial output shows signs of year's biggest slump

Published on Wednesday 6 December 2006 15:02

INDUSTRIAL output in Britain in October fell at its fastest rate in more than a year, the Office for National Statistics (ONS) said today.

The ONS said industrial output fell 0.8 per cent on the month, the sharpest fall since August 2005 and confounding expectations of a 0.1 per cent rise.

And the surprise slide suggests the sector suffered a dull start to the final quarter.

"The industrial production data are very disappointing and show the manufacturing sector got off to a very poor start in the fourth quarter," said Philip Shaw, economist at Investec.

"Surveys are suggesting the sector continues to expand, but the natural conclusion would be that momentum is beginning to wane."

The decline in industrial output was partly driven by a sharp fall in energy output as mild weather curbed demand for heating.

Manufacturing output fell 0.4 per cent, its biggest contraction in a year and also wrongfooting analysts who had expected a 0.2 per cent increase, ONS said.

RBC Capital Markets economist Richard McGuire said: "Today's report doesn't augur well for manufacturing's contribution to growth and will provide modest support to the view that interest rates have peaked in the UK."