Official manufacturing output figures disappoint

Total manufacturing output fell by 7.8 per cent in October 2009 compared to the same month a year ago. Output decreased in 12 of the 13 sub-sectors and rose in one sub-sector. The largest contributors to the decline were the basic metals and metal product industries which fell by 15.7 per cent and the machinery and equipment industries which decreased by 17.8 per cent. The only increase in output over the same period was 1.0 per cent in the 'other' manufacturing industries. The month on month figure for manufacturing output covering the period between September and October, was flat. Output increased in four of the 13 sub-sectors and fell in nine sub-sectors. The largest increases in output were 5.6 per cent in the machinery and equipment industries and 2.6 per cent in the chemicals and man-made fibres industries. The biggest decreases were 2.7 per cent in the electrical and optical equipment industries and 1.4 per cent in the paper, printing and publishing industries. Following the release of today's Office for National Statistics (ONS) Index of Production statistics, Barclays head of manufacturing, transport and logistics Graeme Allinson said: "Today's flat figures for manufacturing output are something of a disappointment, with the sector still not far removed from the bottom of the recessionary curve as domestic demand in particular remains depressed. "The Purchasing Managers Index [from the Chartered Institute of Purchasing and Supply] data for November revealed similar sentiment, with economists somewhat surprised [that] offshore demand for UK products and sterling weakness had not begun to impact more positively on the sector. "While this demonstrates manufacturing is at present struggling to generate momentum, we still view the sector as one with great potential for growth coming out of the downturn. Barclays will be looking closely at lending opportunities in the sector in 2010, particularly as discussions with our customers indicate many are seeing increased openings for investment or expansion, which will require bank support." At the manufacturers' organisation EEF, chief economist Lee Hopley, said: "Although monthly figures have a reputation for volatility they confim that a sustained recovery is still some way in the distance despite a gradual improvement in conditions. All eyes will now be on the Chancellor to provide a stable and predictable business environment to support recovery and not bring forward measures that damage the economy at such a critical time in the cycle."