Double dose of gloom as output falls and sales dip

Hopes of a quick end to the recession this quarter are fading after the manufacturing sector suffered a shock fall in output during April, while figures out today suggest Scottish shoppers remain reluctant to spend.

The Office for National Statistics (ONS) yesterday revealed a 0.7 per cent drop in UK manufacturing output between March and April – an unexpected disappointment after the 0.9 per cent rise the previous month.

Wider industrial production remained unchanged in April, helped by a boost to energy output from the cold weather as Britons turned up their central heating.

Most experts had forecast an unchanged reading for manufacturing output in April, and a slight rise across industrial production as a whole.

Mark Lee, head of manufacturing at Barclays, said: “The harsh realities are hitting home. UK manufacturers are focusing on achieving greater cost efficiencies as orders from our biggest trading partner, Europe, remain flat at best.”

The ONS said manufacturing data was dragged lower by falls in pharmaceutical products and preparations, as well as in other manufacturing and repair.

In the wider industrial production sector, a 13.6 per cent month-on-month surge in electricity and gas usage during the coldest April since 1989 was offset by a 6.4 per cent fall in oil and gas extraction caused by the closure of the North Sea’s Elgin platform after a gas leak.

Today the Scottish Retail Consortium (SRC) will add to the woes, releasing figures showing that sales in May were just 0.1 per cent higher than a year ago. The meagre rise suggests that shops sold fewer items than last year, with the rise more than accounted for by inflation.

The SRC said that, on a like-for-like basis, sales were 1.2 per cent lower than a year ago, and that on both measures sales were much weaker in Scotland than for the UK as a whole.

SRC director Ian Shearer said: “A welcome spell of warmth at the end of May helped lift these figures, but the burst of summer didn’t bring a boost on the scale enjoyed elsewhere.

“The underlying picture remains weak, showing sales falling in real terms for the sector overall, and this is particularly worrying given that they are being compared against poor figures for May in 2011.

“Consumer caution persisted, household budgets are still under severe strain and most shoppers are committed to buying only what they consider to be essentials.”