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| UK manufacturing sector falls back into recession | UK manufacturing sector falls back into recession |
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| Britain’s factory output rebounded in March but the 0.1% rise was not enough to prevent the manufacturing sector falling back into recession for the third time in eight years. | |
| Factory output has fallen in the last two consecutive quarters, according to the Office for National Statistics, and was 1.9% lower than in March 2015, as the iron and steel closures dragged down the sector’s overall output. | |
| Related: UK factory output suffers biggest fall since 2013 - business live | Related: UK factory output suffers biggest fall since 2013 - business live |
| Analysts said the outlook for the next few months remained grim as producers continued to be squeezed by a combination of weak global demand and waning sales in the UK, in some cases linked to uncertainty surrounding EU referendum vote next month. | Analysts said the outlook for the next few months remained grim as producers continued to be squeezed by a combination of weak global demand and waning sales in the UK, in some cases linked to uncertainty surrounding EU referendum vote next month. |
| The decline is likely to be seen as as blow to George Osborne’s mission to revitalise Britain’s industrial output, which remains 10% lower than its peak in 2008. | The decline is likely to be seen as as blow to George Osborne’s mission to revitalise Britain’s industrial output, which remains 10% lower than its peak in 2008. |
| One of the biggest components of the recent weakness was the 4% drop in the manufacture of basic metals and metal products over the last year, which contributed to the biggest fall in total production since May 2013. | |
| Chris Williamson, chief economist at Markit, said: “Surveys of manufacturing, services and construction point to GDP rising at an equivalent quarterly rate of 0.1% in April. | Chris Williamson, chief economist at Markit, said: “Surveys of manufacturing, services and construction point to GDP rising at an equivalent quarterly rate of 0.1% in April. |
| “Growth could be even weaker if the surveys disappoint in coming month, which seems probable given the intensifying uncertainty over the outcome of the EU referendum.” | “Growth could be even weaker if the surveys disappoint in coming month, which seems probable given the intensifying uncertainty over the outcome of the EU referendum.” |
| David Kern, chief economist at the British Chambers of Commerce, warned that manufacturing remains in long term decline, despite a modest recovery in March “While adverse global conditions remain a major challenge for manufacturing, this is now being exacerbated by a slowdown in the domestic economy,” he said. | |
| “A healthy manufacturing base remains critical to the wellbeing of the UK economy in key areas such as innovation, exports and productivity, making it vital that the sector is given more support to compete against global and domestic headwinds.” | “A healthy manufacturing base remains critical to the wellbeing of the UK economy in key areas such as innovation, exports and productivity, making it vital that the sector is given more support to compete against global and domestic headwinds.” |
| Analysts had expected a more substantial 0.3% recovery since February after strong output figures from the car industry and an improvement in pharmaceuticals. | Analysts had expected a more substantial 0.3% recovery since February after strong output figures from the car industry and an improvement in pharmaceuticals. |
| Figures from the Society of Motor Manufacturers and Traders for the first quarter of the year showed UK factories produced 443,581 cars, up 10.3% on same quarter last year. It was the strongest first-quarter performance since 2004. | Figures from the Society of Motor Manufacturers and Traders for the first quarter of the year showed UK factories produced 443,581 cars, up 10.3% on same quarter last year. It was the strongest first-quarter performance since 2004. |
| The wider measure of industrial production, which includes mining, rose by 0.3% month on month but was only 0.1% higher than a year ago. | The wider measure of industrial production, which includes mining, rose by 0.3% month on month but was only 0.1% higher than a year ago. |
| Mining continued to decline in March, but an increase in energy production, attributed to the colder weather that arrived in the spring after a mild winter, pushed up industrial production overall. | Mining continued to decline in March, but an increase in energy production, attributed to the colder weather that arrived in the spring after a mild winter, pushed up industrial production overall. |
| Ruth Miller, a UK economist at Capital Economics, said the next few months would be tough but an improvement later in the year was likely as the lower pound helped exporters. | Ruth Miller, a UK economist at Capital Economics, said the next few months would be tough but an improvement later in the year was likely as the lower pound helped exporters. |
| “While Brexit uncertainty may be partly to blame, the sector’s poor performance of late is certainly nothing new and many of the headwinds to growth in 2015 emanating from a weak global environment are still in place. But we still expect things to look up as the year progresses. | “While Brexit uncertainty may be partly to blame, the sector’s poor performance of late is certainly nothing new and many of the headwinds to growth in 2015 emanating from a weak global environment are still in place. But we still expect things to look up as the year progresses. |
| “Sterling’s recent depreciation and our expectations that global growth will pick up slightly in 2016 should allow the sector to return to modest growth later this year., | “Sterling’s recent depreciation and our expectations that global growth will pick up slightly in 2016 should allow the sector to return to modest growth later this year., |