Shock fall in UK factory output

Hopes over the recovery of the UK’s manufacturing sector were rocked today by a surprise contraction in activity during February.

The Office for National Statistics (ONS) said output in manufacturing fell 1 per cent between January and February, significantly worse than the City’s expectations that it would be flat, and its biggest drop since April.

To add to the gloom, manufacturing figures for January were revised down to show the sector contracted by 0.3 per cent, compared with a previous estimate of 0.1 per cent and dashing hopes the sector returned to growth in 2012.

The weak manufacturing data flies in the face of recent bullish surveys and dents recent hopes the UK can dodge another recession after its 0.3 per cent contraction at the end of 2011.

Samuel Tombs, an analyst at Capital Economics, described the latest manufacturing figures as “terrible” and said they threatened hopes for a decent increase in first quarter GDP.

He added: “Hopes that manufacturing could help to drive a strong and sustained recovery in the economy are rapidly fading.”

In industrial output, which includes the mining and quarrying sectors, output rose 0.4 per cent between January and February although economists warned that the figure is likely to decline again in March when warm weather is expected to have hit production.