Official manufacturing data suggests growing risk of recession
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UK manufacturing output fell by 0.7% in October 2011 compared with September 2011 but more tellingly fell by a similar amount during the more reliable gauge of the three month period to October. This is the first fall in three month growth since October 2009.
The largest monthly fall came in the manufacture of metal products. In contrast, the manufacture of machinery and equipment industries rose by 2.5% in October.
On the back of the latest data, Chris Williamson, chief economist at Markit, suggested that a further deterioration in industry is to be expected in November.
"Manufacturing therefore looks set to act as a drag on economic growth in the fourth quarter," he went on. "Producers face weak household and business confidence at home, while key export markets are also suffering. The eurozone, to which the UK exports two-fifth of its goods, appears to be already in another recession."
Williamson believes that the current woes of manufacturers raises the likelihood that the UK economy will stagnate in the fourth quarter, with the combination of subdued demand at home and the ongoing crisis in the eurozone suggesting that the risks of the UK following the single currency area into another recession have grown considerably.
