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Fresh setback for recovery hopes as industry falters

Published 13/06/2012

Hopes of an end to Britain's recession woes were dashed when official figures showed that manufacturing suffered a shock fall in output during April.

The Office for National Statistics (ONS) revealed a 0.7% drop in manufacturing output between March and April - an unexpected disappointment after the 0.9% rise the previous month.

Wider industrial production output remained unchanged in April, but this was largely helped by a boost from energy output caused by the cold weather as Britons turned up the central heating.

Alan Clarke, economist at Scotiabank, said the chilly weather saved the UK from an industrial production "bloodbath".

The data is expected to reinforce demands for the Bank of England to increase quantitative easing (QE) to help the UK's ailing economy.

It follows May's Ulster Bank purchasing managers' index (PMI), which found that the pipeline of new work for Northern Ireland firms, including manufacturers, had fallen at the steepest rate in 16 months.

Experts had forecast an unchanged reading from the ONS for manufacturing in April, while the data had been expected to show a slight rise in industrial production as a whole. Mark Lee, head of manufacturing at Barclays, said: "The harsh realities are hitting home. UK manufacturers are focusing on achieving greater cost efficiencies as orders from our biggest trading partner, Europe, remain flat at best."

The ONS said manufacturing data was dragged lower by falls in pharmaceutical products and preparations, as well as in other manufacturing and repair.

Manufacturers' organisation EEF called the figures "disappointing", with production now hovering around levels seen at the end of 2010.

Samuel Tombs at Capital Economics said: "Given that the eurozone crisis has intensified and recent manufacturing surveys have been very weak, it seems likely that the industrial sector will remain a drag on GDP."

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