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U.K. November Manufacturing Output Falls Unexpectedly


U.K. manufacturing output declined unexpectedly in November in yet another blow to hopes of a recovery in the final quarter of 2012.

Manufacturing output decreased 0.3 percent in November from a month ago, when it dropped 1.3 percent, the Office for National Statistics showed Friday. Output was forecast to grow 0.5 percent.

Meanwhile, industrial output rose 0.3 percent month-on-month, underpinned by robust mining output. The November increase reversed last month's 0.9 percent fall, but the rate of growth was smaller than the 0.8 percent rise forecast by economists.

Mining output surged 8.7 percent, while output of water and waste management gained 0.6 percent. These increases were partially offset by manufacturing and by a 4.1 percent fall in energy output.

Even if production show a decent rise in December, it still looks likely to have contracted by close to 2 percent in the fourth quarter as a whole, Vicky Redwood, chief UK economist at Capital Economics said.

Year-on-year, industrial production fell 2.4 percent annually in November versus a 3 percent decline in October. This was the 20th consecutive monthly fall on the same month a year ago and sharper than the 1.9 percent expected fall.

Factory output dropped 2.1 percent compared to October's decline of 2 percent. Economists had expected a 1.3 percent annual fall.

Separate data from the ONS revealed that construction output was down 3.4 percent in November from the previous month and decreased 9.8 percent annually.

IHS Global Insight's Chief UK Economist Howard Archer said industrial and construction output data for November fuel fourth quarter contraction fears. The economist has penciled in a GDP contraction of 0.1 percent in the fourth quarter, but he pointed out that the downside risks are increasing.

Exiting recession in the third quarter, the British economy expanded 0.9 percent, following a 0.4 percent contraction in the second quarter.

The service sector shrank in December due to a fall in incoming new orders, the latest Purchasing Managers' survey showed.

Further, the British Retail Consortium reported a very moderate 0.3 percent growth in retail sales in December as the Christmas trading period failed to give the much-awaited boost to consumer spending.

by RTTNews Staff Writer

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