British industry stalls

06-11-2006

British industry stalls
UK industrial production was flat during the last three months, official figures reveal, with output rising by only 0.1 per cent.

The quarterly data from the Office of National Statistics shows that the majority of individual sectors experienced marginal rises, largely offset by significant dives in individual industries.

Mining and quarrying output was down 3.9 per cent on a quarterly basis, while the slump rises to 7.4 per cent when compared to September 2005's figures.

Manufacturing output rose 0.6 per cent, with slight increases experienced in the electricity, gas and water sectors.

The quarter's biggest success story was found in the chemicals and man made fibres industry, which went up by 1.6 per cent.

Commenting on today's statistical release, Howard Archer of analyst firm Global Insight claimed that the "disappointingly flat" figures proved the industrial sector was well past its peak.

The chief UK and European economist said "there are some worrying clouds on the horizon for UK manufacturers. Strong export demand has been a key factor driving manufacturers' improved performance in 2006, but it seems highly likely that global growth will be significantly softer in 2007. Meanwhile, UK manufacturers' competitiveness is being damaged by the current strength of the pound".

But Mr Archer added that the Bank of England was unlikely to be deterred from its anticipated decision to raise interest rates by a quarter of a per cent on Thursday.

"Nevertheless, the strength of wage settlements in 2007 remains the key factor determining whether or not the Bank of England lifts interest rates further next year," he concluded.


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