Industrial Output Falls
Small Business News – 12th December 2012
Figures have shown that the UK’s industrial output has fallen sharply in October.
Compared to the figures for September, manufacturing output dropped by 1.3% according to data from the Office for National Statistics (ONS).
Looking at specific sectors, food and drink output were down, most notably beer.
The predictions were correct and the fall in manufacturing is the worst since the Jubilee celebrations.
However, there was an upturn for the economy with a much-needed boost from the London 2012 Olympics and a 1% rise in overall economic growth in Q3 (July – September) as tourist spending helped to prop the economy up.
Triple Dip Recession?
The downturn in economic growth means that the forecast for Q4 is looking gloomy, with one economist predcting a negative result for the last three months of the year.
Analysts had expected Q3 to see only a 0.2% decline so a fall of 1.3% is concerning, particularly seeing that the Office for Budgetary Responsibility (OBR) had also cut growth rates as reported in last week’s Autumn Statement.
Should this latest downturn be followed by a second successive quarter of decline in Q1 of 2013 then the UK would fall into a third or triple dip recession for the first time ever.
The National Institute for Economic and Social Research (NIESR) estimated that GDP would suggest a 0.1% rise in economic growth for the 3 months up until November, and did not expect the "anaemic" growth to continue.
The UK’s continental neighbour, Europe, is also not helping at home.
The Eurozone is the United Kingdom’s biggest export market, so the continuing sovereign debt crisis over the channel may be putting further pressure on the economy.
Even Germany, Europe’s biggest economy, has not been immune to the slowdown and might even slip into a Q4 retraction itself.
Lee Hopley, Chief Economist at EEF, the manufacturers’ organisation, confirmed that the outlook for manufacturing was getting tougher, especially for exporters to the Eurozone, but said that focus on investment and exports must continue.
However, David Kearn, Chief Economist at the British Chambers of Commerce kept a flicker of hope alive for the British economy, pointing out that oil & gas production figures were down mainly due to oilfield maintainence closures and that these were only temporary.