UK industry’s output points to recession

INDUSTRIAL production and manufacturing output both increased in the three months to September, according to figures out yesterday from the Office for National Statistics (ONS).

But analysts believe the growth represents a temporary rise, with decline coming in the next few months.

The ONS index of production showed output in the third quarter was 0.4 per cent higher than in the previous three months. Similarly, the index of manufacturing rose by 0.2 per cent. The energy sector performed most strongly, rising by 2.4 per cent.

However, analysts believe the growth merely represents a temporary rebound from poor figures in the second quarter, when production fell 1.2 per cent and manufacturing declined by 0.1 per cent.

“Domestic demand for manufactured goods is being held back by tight fiscal policy and the major squeeze on consumers’ purchasing power, while a marked slowdown in global economic activity is clearly hitting manufacturers’ export orders hard,” said Howard Archer from IHS Global Insight.

“The latest evidence suggests that the manufacturing sector is in serious danger of contracting in the fourth quarter.”