UK manufacturing output falls 0.7% in October

The largest year on year output increase was seen in the transport equipment industries, which rose by 6.6% and in the machinery and equipment industries, which rose by 8.8 per cent when using comparative figures for October 2010 and 2011.

Within the transport equipment industries, the main rises were in the manufacture of motor vehicles, trailers and semi trailers (10.6%) and the manufacture of ships and boats (14.9%).

There is growing concern over the manufacturing of basic pharmaceutical products and preparations as year on year figures were down 20.4% in a sector that makes up 4.9% of manufacturing production in the UK.

Chris Williamson, chief economist at Markit, supplier of data for UK PMI figures, said: “Manufacturing output fell 0.7% on the previous three months, which was the first such decline for two years. The official data is now following the increasingly downbeat picture painted by the PMI survey in recent months, which suggests that a further deterioration in industry is to be expected in November.”

Mr Williamson continued: “Manufacturing therefore looks set to act as a drag on economic growth in the fourth quarter.”

Mark Lee, head of manufacturing at Barclays Corporate, commented: “Our conversations with manufacturers has become increasingly gloomy since the summer, as new orders have slowed markedly and many companies struggle with less favourable payment terms and pricing pressures imposed by the larger organisations they supply.”

Mr Lee added: ‪“In this climate UK manufacturers are returning to a business strategy that has become very familiar over the past three years; keeping an incredibly tight rein on cost and working capital and are only investing where essential. It is not a recipe for growth, but certainly a recipe for staying the course through a difficult period.”