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Sharp Oct dip in UK manufacturing


Economists bemoan a "dire" and "diabolical" 1.3% monthly decline

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UK manufacturing output fell 1.3 percent over October in month-over-month terms, the Office for National Statistics (ONS) said on Friday.

The statistics body said a dip in food and drink output, specifically beer brewing, was behind the post-Olympics output decline. The latest monthly figure from the ONS is the worst fall since June when extra public holidays for the Queen's Diamond Jubilee impacted production.

On an annualised basis, October's output decline rate came in at 2.1 percent over the same month last year. Production of alcoholic beverages, especially beer, was down 10 percent from September, and 16 percent on an annualised basis.

Sharp falls were also recorded in ammunition, coke and petroleum distillates production. Additionally, the ONS said the UK's seasonally adjusted index of production fell by 3 percent in October compared with a year ago; the 19th successive monthly fall on the same month a year ago.

Howard Archer, chief economist at IHS Global Insight, described the figures as "dire."

"It is only too apparent that manufacturers are facing a tough environment. Domestic demand for manufactured goods is handicapped by current muted investment intentions and tightening public spending. Furthermore, the current uncertain and still difficult economic environment is probably causing some orders to be delayed or even cancelled," Archer told CFO World.

Meanwhile, muted global economic growth and Eurozone economic weakness, in particular, is limiting overall foreign demand for UK manufactured goods. Alan Clarke, UK economist, at Scotiabank said, "Manufacturing was diabolical. Sadly, I think there is not a lot to suggest that it is temporary. Survey data has remained fairly downbeat."

Earlier, in the government's autumn statement, chancellor of the exchequer George Osborne admitted that the UK economy would shrink by 0.1 percent this year.

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Sharp Oct dip in UK manufacturing
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