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| Manufacturing slump shows economy is more imbalanced than ever | Manufacturing slump shows economy is more imbalanced than ever |
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| Britain’s post-referendum recovery in manufacturing came to an abrupt halt in October. Two months of rising output were followed by a chunky 0.9% drop in October. | Britain’s post-referendum recovery in manufacturing came to an abrupt halt in October. Two months of rising output were followed by a chunky 0.9% drop in October. |
| To put it mildly, this came as a shock to economic forecasters. Strong consumer demand, the fall in the value of sterling and, especially, strong survey evidence, had all pointed to rising factory production. | |
| It didn’t happen. The weak performance of manufacturing was compounded by North Sea oil output falling as a result of routine maintenance. It meant that industrial production, which includes the offshore and onshore energy sectors and mining and quarrying as well as the output from factories, was down by 1.3% between September and October. | It didn’t happen. The weak performance of manufacturing was compounded by North Sea oil output falling as a result of routine maintenance. It meant that industrial production, which includes the offshore and onshore energy sectors and mining and quarrying as well as the output from factories, was down by 1.3% between September and October. |
| That represented the biggest one-month decline since September 2012, a period when the eurozone was going through a particularly acute crisis. | That represented the biggest one-month decline since September 2012, a period when the eurozone was going through a particularly acute crisis. |
| The Office for National Statistics always warns against reading too much into the data for a single month and it seems highly probable that North Sea oil production will have bounced back in November. | The Office for National Statistics always warns against reading too much into the data for a single month and it seems highly probable that North Sea oil production will have bounced back in November. |
| Even so, the figures are worrying in two respects. Firstly, they mean that it will take a very strong performance in November and December to prevent a second successive quarterly fall in industrial production. Even a 1% increase in both months would result in a 0.1% decline in the fourth quarter. That would leave the sector, which accounts for 15% of economic output, in a technical recession. | Even so, the figures are worrying in two respects. Firstly, they mean that it will take a very strong performance in November and December to prevent a second successive quarterly fall in industrial production. Even a 1% increase in both months would result in a 0.1% decline in the fourth quarter. That would leave the sector, which accounts for 15% of economic output, in a technical recession. |
| Secondly, the weakness seen in October cannot be dismissed as a one-off. Even if City economists are right in their belief that the outlook for UK manufacturing is brighter than the latest figures suggest, there is a lot of ground to make up. | Secondly, the weakness seen in October cannot be dismissed as a one-off. Even if City economists are right in their belief that the outlook for UK manufacturing is brighter than the latest figures suggest, there is a lot of ground to make up. |
| Manufacturing output in the three months to October was 5.7% below its level when the economy nosedived into recession in the first quarter of 2008. Industrial production, affected by the gradual depletion of North Sea fields, has seen an even bigger fall: 8.6%. | Manufacturing output in the three months to October was 5.7% below its level when the economy nosedived into recession in the first quarter of 2008. Industrial production, affected by the gradual depletion of North Sea fields, has seen an even bigger fall: 8.6%. |
| The economy, in other words, is more unbalanced than it ever was. | The economy, in other words, is more unbalanced than it ever was. |