U.K. industrial output declined by more than expected in November, with the output by mining, energy and manufacturing industries contracting during the month, data from the Office for National Statistics showed Thursday.
On a month-over-month basis, industrial production dropped 0.6 percent in November. Economists were expecting output to edge down 0.1 percent after a revised 1 percent contraction in October. Manufacturing production was down 0.2 percent, in line with expectations.
"Today's figures suggest that the industrial sector is heading straight back into recession," said Samuel Tombs, an economist at Capital Economics.
Meanwhile, industrial production declined 3.1 percent annually, faster than the 2.2 percent drop expected by economists. This was the biggest fall in production since December 2009, the statistical office said.
"Hopes that the manufacturing sector could see extended healthy growth and help the economy to see more balanced activity now seem a distant memory," IHS Global Insight chief economist Howard Archer said. "Indeed, the danger is now that the sector it is leading the economy into recession,"
Output from Mining and quarrying, energy and manufacturing all fell compared to the previous month, contributing negatively to the overall index. Basic metals and metal products industries were the largest contributor to the decline in factory output, with a 2.4 percent contraction in production.
Manufacturing output declined 0.6 percent year-on-year compared to the 0.5 percent drop expected by economists.
The overall impression is that manufacturers ended 2011 under serious pressure and face a difficult start at least to 2012, IHS Global Insight's Archer said.
The latest purchasing managers' survey by Markit Economics revealed that the manufacturing sector contracted again in December, though there were signs of stabilizing.
Business confidence hit a three-year low in December, according to a recent survey by Lloyds Banking Group PLC. Survey respondents predicted a 3-in-4 probability of a recession.
In its latest Quarterly Economic Survey released Tuesday, the British Chambers of Commerce said it expects the U.K. economy to stagnate overall until mid-2012, though the situation is better than those seen in the worst phase of the last downturn.
Last month, the Confederation of British Industry (CBI) urged the government to urgently rebalance its economy and make it less reliant on debt-fuelled consumer and government spending. Rebalancing is the only way to achieve securing future long-term growth, it said.
The Bank of England, which is set to announce its monetary policy decision later in the day, is expected to retain its key interest rate at a record low during. It is also likely to keep the asset purchase target unchanged at GBP 275 billion.
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