Industrial Output Plunges In August

(Reuters) – INDUSTRIAL OUTPUT PLUNGED unexpectedly in August and at its sharpest monthly pace since January, according to official data, denting hopes for a strong rebound in growth in the third quarter of this year.

The Office for National Statistics said manufacturing output fell 1.9% on the month, confounding analysts’ expectations for a 0.3% rise. July’s increase was revised down to 0.7% from 0.9%.

The wider measure of industrial output, which includes power generation and resource extraction, fell by 2.5% on the month, also the sharpest drop since January and against forecasts for an increase of 0.2%.

August’s falls in output more than offset the gains recorded in the previous two months, and, although industry accounts for just 17% of the economy, lessened the chance that Britain has emerged from recession after more than a year in decline.

Analysts now reckon GDP will barely enter positive territory in Q3 and even then only if services output recovers strongly.

‘August’s dismal industrial production figures will dampen some of the recent optimism about the economy’s apparent bounce-back,’ said Vicky Redwood of Capital Economics.

‘Accordingly, a return to positive overall GDP growth in Q3 now looks less certain,’ she added.

The pound fell to a one-week low against the euro and gilt futures hit a contract high as investors scaled back their expectations for a quick recovery and bet that monetary policy would have to remain loose for some time yet.

‘This is a bit of a reality check on the status of the UK economy,’ said Philip Shaw, economist at Investec.

Bank of England policymakers have expressed concern about the strength of any upturn in the economy and Tuesday’s data will reinforce their view that Britain is in for a long, hard slog back to growth, even though some forward-looking indicators have improved in recent months.

3 Responses

  1. UK’s Shock Fall in Industrial Output – 11.2% in a single year

    Britain has lost its way in the modern world in terms of its once highly coveted industrial prowess and since it was the world’s foremost technological nation that led the world some 100 years ago. What has gone so badly wrong for us? The answer is that successive British governments, from when Henry Campbell-Bannerman become the first Prime Minister of Britain and was the first to officially bear the title of ‘Prime Minister’ to Brown today, did and do not still understand the ‘real’ strengths of the British people. These reside as just two examples stated, in the creative and innovative thinking of our people determined by government reports by Japan (1980s) and Germany (1990s). This stated that up to 55% of the modern world that we see today was created through the thinking of our people. But the most important fact is that 75% of this leading-edge thinking came from the British lone inventors and not our universities or advanced centres of research. Therefore this country needs more than anything else, the technological catalyst and system putting in place where our innovative thinking can be released. For this is the only thing that will deliver our nation in the future from increasing poverty and continual economic decline. This need is for the establishment of the ORE-STEM system of innovative and creative development in the UK and where it is the only viable answer to our problems. Indeed it was one-hundred percent backed in 1997 by the world’s pre-eminent scientists and engineers at that time but where our government took no notice. Unfortunately both politicians and journalists in this respect are also silent about this real need for change for our nation and do the British people the most dire disservice that they ever could possibly do through this ignorance. But the greatest threat to our nation’s future survival is that their stupidity simply does not allow them to realise this.

    Dr David Hill
    World Innovation Foundation
    Bern, Switzerland

    • You are a true visionary, Sir.

      Thank you for taking the time to contribute to this ever so humble blog.

      For readers (especially the younger generation) go here for a brief overview of the WIF.

    • It is impossible to do anything else but agree. But while our politicians cling greedily to power and the only model of a World Government is an equally self serving EU, I fear no necessary changes to current policies will come from this generation.

      If anything, the financial crisis and the parliamentary expenses scandal has taught us one thing and that is that our politicians and industry leaders are motivated by just one thing: personal greed.

      We can only hope that the next generation has better success than this. But by then of course, it may be too late.

      It does not bode well for mankind does it?

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