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Manufacturing output takes a dive

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Date: Wednesday 07 May 2008

LONDON (ShareCast) - Manufacturing output in the UK fell at its fastest pace in six months during March, surprising analysts who had expected no change from February’s read.

Figures from the Office for National Statistics revealed that production dropped 0.5% during the month, the largest decline since September last year.

The retreat, which included a drop off in car production, follows a couple of good months, with output having improved by 0.4% in both January and February.

Output still rose 0.3% during the first quarter of 2008 from the previous three-month period, but that’s still less than the 0.5% predicted by the provisional GDP estimate.

The decline in March was widespread, said the ONS, with decreases in 10 of the 13 sub-sectors, including a 0.3% slide in the transport equipment industries.

Elsewhere in the report, the overall index of production also sank 0.5% between February and March, impacted by a 1.4% slide in energy supply output.

The monthly decline was the worst performance since February 2007 and missed forecasts for a 0.1% drop. Meanwhile, a quarterly decline of 0.2% was attributed to weaker output in mining and quarrying as well as of electricity, gas and water.

Despite the disappointing numbers, the Bank of England is still expected to keep interest rates on hold at 5% tomorrow.