UK manufacturing output slumps

Britain’s manufacturers have suffered a drop in output as they grapple with economic malaise in their big export markets in the eurozone.
The manufacturing slowdown does not appear to have dented the economy’s overall growth rate but it is another setback to hopes that the UK could “rebalance” away from its reliance on services and domestic demand. The National Institute of Economic and Social Research (Niesr) think-tank forecast on Tuesday that the economy grew 0.7 per cent in the three months to the end of October, the same pace as the previous month.

That suggests the UK is still on track to grow 3 per cent over the year, faster than any other rich industrialised country.

Most economists expect the pace of growth to slow to about 2.5 per cent next year, partly because of the weakness in the eurozone, the UK’s biggest trading partner.

Official data show total industrial production fell 0.1 per cent between September and October, driven by an unexpected 0.7 per cent drop in manufacturing output.

Manufacturing output was still 1.7 per cent higher than a year ago and economists warned that the monthly data could be volatile. But manufacturers are having an increasingly hard time as the eurozone’s problems sap demand for their exports.

Output fell in eight of the 14 manufacturing subsectors with the biggest drop in computers and electrical products. The EEF trade association said the electronics sector’s large exposure to the German market had “taken its toll on production”.

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