Unexpected decline for UK manufacturing

UK manufacturing is showing a bigger than expected decline this year

New official figures show a bigger than expected decline in UK manufacturing output, adding to fears of a worsening economy.

The Office for National Statistics (ONS) said the sector's output fell 0.5 per cent between April and May this year. Analysts had been expecting a 0.1 per cent decline.

On an annual basis, manufacturing output fell 0.8 per cent in May. During the latest quarter to May, the big dips were in rubber and plastic products, which fell 2.2 per cent, and wood products, which dropped 1.5 per cent.

Manufacturers have been hit in recent months by ballooning costs for oil – a raw ingredient for a host of products – as well as higher metals and food prices.

Paul Dales, UK economist at Capital Economics, said the data added to recent evidence that the UK economy was “perilously close to recession”.

"The lower pound should mean that the manufacturing sector is the UK's shining light, but with output no higher than eight months ago, it seems that the global and domestic slowdowns are having more of an impact," he said.

The ONS data is the latest in a series of gloomy surveys pointing to a slower economy.

Last week another manufacturing sector report showed activity in June falling to its lowest level since the aftermath of the 9/11 terror attacks. The Chartered Institute of Purchasing and Supply's manufacturing index for June fell to 45.8, with a score above 50 signalling growth.

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