Manufacturing output surprise fall

Manufacturing output unexpectedly fell by 0.5 per cent in March, according to the latest government figures.

The manufacturing sector had grown in January and February so the drop, reported by the Office for National Statistics (ONS) took analysts by surprise.

"While March's drop in output follows healthy manufacturing activity in January and February, it nevertheless fuels belief that the previously resilient manufacturing sector is now being increasingly hit by slowing domestic demand, weaker activity in key export markets, elevated energy and commodity prices, and tighter credit conditions," Global Insight economist Howard Archer said.

The growth dip was across the industry, the ONS said, with the biggest decline recorded in the transport equipment industries at 1.3 per cent.

Industrial production also fell 0.5 per cent in March, the survey found.

Energy supply output decreased by 1.4 per cent in March, while mining and quarrying output increased by 0.5 per cent with a rise in gas production.

The drop in manufacturing output will contribute to a declining GDP, putting further pressure on the Bank of England to reduce interest rates on Thursday, although rumbling inflationary pressures may discourage Bank of England's decision-makers until next month.

Sarah Routledge