UK manufacturing output disappoints

Commenting on the latest statistics, Graeme Allinson, head of manufacturing, transport and logistics at Barclays Commercial Bank, said the majority of manufacturers he had spoken with recently believed that although the recession had ended, they were still not witnessing significant growth. The August decline was indicative of this position. He went on: "Our experience tells us that the sector will continue to fluctuate within a limited range in the short-term, as manufacturing simply stabilises. The real test for UK manufacturers at present is 2010 budgets. Attention must be paid to investment in plant and machinery, in order to ensure facilities remain at prime operational capacity and are able to meet demand when it improves. Putting off investment will have diminishing returns as both growing maintenance costs and the risk of failing production lines become an increasing burden." At the manufacturers' organization EEF, head of economic policy Lee Hopley said: "Today's manufacturing figures reinforce our view that the road out of recession is set to be a bumpy one. Companies have been making significant inventory adjustments, but signs of a sustained turnaround in demand remain elusive. The volatility in output is likely to remain throughout the rest of the year." While output for the three months to August was unchanged, August, output of the manufacturing industries decreased by 1.9 per cent. The most significant decreases in output were 2.4 per cent in the paper, printing and publishing industries, 2.4 per cent in the electrical and optical equipment industries and 1.7 per cent in food, drink and tobacco industries. There were no increases in output among the manufacturing industry sectors in August. Over the three month period, the most significant rises were 7.8 per cent in the transport equipment industries, 9.3 per cent in the wood and wood products industries and 3.1 per cent in the rubber and plastic products industries. The most significant fallers were 2.8 per cent in the paper, printing and publishing industries, 1.9 per cent in the chemicals and man-made fibres industries and 1.9 per cent in the electrical and optical equipment industries.