UK industrial output Declined More Than Forecast image

UK manufacturing output fell unexpectedly in April, raising the risk of a longer recession.

Output from the U.K.’s manufacturing sector fell more than economists forecast in April, pointing to continued weakness in the economy at the start of the second quarter.

The Ernst & Young Item Club economic forecasting group said it was a “serious cause for concern”.
Official figures showed manufacturing – accounting for 12 per cent of the overall economy – sliding 0.7 per cent during April, as the Chancellor George Osborne’s “march of the makers” rallying cry was stymied by the deepening crisis in the eurozone.

Annually, manufacturing output dipped 0.3 percent, confounding the 0.4 percent increase expected by economists.

“The drop in manufacturing output is a blow to the economy’s chances of avoiding further contraction in the second quarter – especially as it is being handicapped by the extra day’s public holiday resulting from the Queen’s Diamond Jubilee celebrations,” said Dr Howard Archer, Chief UK Economist at IHS.

uk-mo-06122012-2Britain’s economy is in recession after it shrank 0.3 percent in the first quarter of this year and by the same amount in the final three months of 2011. A recession is defined as two successive quarters of contraction.

Following after a decline by the same level in the last quarter of 2011, the figures confirmed that the UK is back in recession.

Separately, the National Institute of Economic and Social Research offered some hope for the British economy, with its prediction that GDP grew by 0.1pc in the three months ending May.