UK output dries up in March

Only the motor industry did well in March

The UK's factories turned out 0.4% less in March than the month before, underlining the long-term trouble UK manufacturing is facing and reinforcing worries about the future.

The numbers released by the Office of National Statistics for March - the month war was launched in Iraq - represent the worst fall since October last year, and show a 1% fall over 12 months.

The numbers, an unwelcome turnaround from February's 0.1% expansion, mean that economic growth in the three months from January to March is likely to be even worse than the 0.2% the ONS predicted earlier this year.

Manufacturers have been pushing for further cuts in interest rates to help them invest, but the Bank of England's Monetary Policy Committee (MPC) kept rates at 3.75% - a 48-year low - at its meeting on Thursday.

I don't think there's much good news on the horizon

Alan Castle, Lehman Brothers

The recent decline in the value of the pound may help things in the future, some economists said.

"One would hope that the 7% depreciation in sterling... since the start of the year will help ease the pain," said Philip Shaw, economist at Investec in London.

"But it will be some while before the more competitive pound benefits the sector. In the meantime, we wouldn't be surprised if the MPC cuts rates once more."

Trouble ahead?

The only sector of the 13 the ONS surveys to register a significant gain over the month was the motor industry, where transport equipment output rose 1.3%.

But otherwise the picture was bleak across the board.

Electrical and optical equipment output fell 2.6% in March alone, with electricity, gas and water output down 3.1% and mining and quarrying falling 1.1%.

"The numbers confirm that the first quarter was very weak," said Alan Castle, economist at Lehman Brothers in London.

"The survey evidence is really pointing to more weakness in the second quarter. I don't think there's much good news on the horizon."