Slump in factory output likely to prove a blip

Output in Britain's manufacturing sector unexpectedly slumped in October, according to official figures that were described by economists as 'disappointing' but likely to be a blip.

The textiles, pharmaceuticals and food sectors saw heavy falls in production. Picture: Ian Rutherford

Data from the Office for National Statistics (ONS) showed that output from the sector fell 0.9 per cent in ­October, compared with a

0.6 per cent rise in September – economists had been eyeing growth of 0.2 per cent.

Overall industrial production also came in below expectations, dropping for the third month in a row to a decline of 1.3 per cent in October. Economists had been pencilling in total production output to nudge up by 0.4 per cent month-on-month.

Jack Coy, an economist at think-tank the Centre for Economics and Business Research (CEBR), said: “Failing emphatically to meet consensus expectations for a slight rise in output, this is disappointing news.

“The fall in output represents the sharpest monthly drop since 2012. Nonetheless, the news should not be overstated as a signal of a Brexit-related downturn, as other factors underpin the fall. The sharp fall was mainly due to temporary maintenance, including a shutdown of the Buzzard oil field in the North Sea.”

The ONS said manufacturing output notched up its biggest fall since February, with the production of basic pharmaceutical products dropping 3.6 per cent. Oil and gas extraction plummeted 10.8 per cent after the Buzzard shutdown.

Year on year, total industrial output was down 1.1 per cent and manufacturing output fell by 0.4 per cent.

Manufacturing PMI figures for October had painted a brighter prospect for the sector, with output hitting 54.3, down from 55.5 in September. Any reading above 50 denotes growth.

Lee Hopley, chief economist at manufacturing organisation EEF, said the industry was on course to mount a comeback before the end of the year.

“This is not the start to the fourth quarter that we expected to see in the official statistics, given the rather more buoyant survey indicators over the past few months.

“Output falls appear fairly widespread across subsectors, but falls in pharmaceuticals, textiles and food were responsible for much of the drop over the month.

“While this is a disappointing set of figures, more upbeat commentary coming from across the sector … points to this trend reversing in the final months of the year.”

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