UK manufacturing falls in March

Despite March's data, manufacturing grew in the first three months of 2008.

UK manufacturing output fell by 0.5% in March, the sharpest rate of decline in six months, official data has shown.

The unexpected slide, after a couple of months of strong growth, included a fall-off in car production, the Office for National Statistics said.

Observers say the data will add to worries about the UK economy ahead of Thursday's interest rate decision.

However, manufacturing rose by 0.3% in the first three months of 2008 compared with the fourth quarter of 2007.

The wider measure of industrial production also fell 0.5% in March - its fastest rate of decline in more than a year.

'Soft reading'

Most analysts expect the Bank of England's rate-setters will hold the key interest rate at 5% this week, having cut it from 5.25% in April.

George Buckley of Deutsche Bank said the latest data would not necessarily be given much weight in the decision by the Bank of England's Monetary Policy Committee (MPC).

"There has been a last minute flurry of disappointing UK economic data - prompting the obvious question - 'Could the MPC cut rates?' Alan Clarke, BNP Paribas

"Just as these are weaker compared to expectations, they were significantly stronger compared to expectations in January and February," he said.

"Nonetheless, it is another soft economic reading for March and it suggests the slowing in the economy is gaining traction."

The figures follow data earlier this week from the Chartered Institute for Purchasing and Supply which suggested that the UK services sector grew at its slowest rate in nearly five years in April as costs rose.

"There has been a last minute flurry of disappointing UK economic data - prompting the obvious question - 'Could the MPC cut rates?'" said Alan Clarke of BNP Paribas.

"However, we know from recent MPC minutes, the committee tend to be reluctant to deliver back-to-back rate moves.

"One reason for that is the fear that it will cause the market to extrapolate the move and price in even deeper cuts."