Manufacturing output falls 5%

Manufacturing output, reported the Office for National Statistics, fell by 3.3% in the three months to November compared with the previous three months. The most significant falls were in the printing (4.9%), transport equipment (5.7%) and metals industries (5.7%). The usually more volatile single month production output figure for November showed a 2.9% fall with, chemicals (6.2%), transport (5.3%) and metals (4.6%) sectors taking the biggest hits. Commenting on today's ONS manufacturing figures, Ray O'Donoghue, Head of UK Manufacturing at Barclays said: "The 2.7 per cent fall in manufacturing output in the three months to November 2008, compared with the previous three months, is the most significant decline we have seen in recent years and reflects a general fall in demand for goods ranging from cars to household goods. In particular, companies supplying the automotive sector continue to feel the greater share of the strain as OEMs close their doors for significant periods in order to destock. In addition, the 4.6 per cent drop in basic metals in part reflects the uncertainty created by the rapid decline in steel prices, causing many buyers to defer major steel-based purchases in the short term. However, despite the difficulties of the current climate, cash rich businesses with well capitalised balance sheets are now beginning to contemplate attractive acquisition opportunities that will add long term value to their existing businesses. The falling price in several key manufacturing inputs and a favourable exchange rate for exporters also offers some consolation.”