The weakest December for UK manufacturing since the financial crisis has taken the heat out of the hopes of an economic revival in the new year.
Manufacturing output in the UK fell 1.6 per cent month-on-month in December, according to the latest official data released on Thursday. It was the sharpest decline since May 2009 and was broadly in line with analysts’ forecasts in a Bloomberg survey.
Growth in output slowed sharply from the previous month. Growth in manufacturing has stagnated for a second successive month, though total production and industrial production were slightly better than expected.
Output rose 1.4 per cent in the UK last year, significantly less than analysts’ forecasts. Construction output, which has been consistently weak, shed 0.2 per cent in December, causing the non-durable goods sector to decrease 3.6 per cent last year.
The FTSE 100 opened almost 1 per cent lower on the weakening, but they recovered most of their losses in the first half of the day, although they were still 2.5 per cent off at 6,280 by 9.15am.
The data, though, only take into account manufacturing and construction, which accounts for only 15 per cent of the economy. Data on the economy as a whole will be released on Friday by the Office for National Statistics and will include a breakdown of consumer spending.
On Friday, the bank rate will be 0.75 per cent — the same as it was on Thursday — the first time it has been at a record low for over 50 years.