Page last updated at 15:20 GMT, Friday, 9 January 2009

UK manufacturing declines sharply

Welder at UK factory
Manufacturing output has fallen for nine months' running

UK manufacturing output fell at its fastest pace since 1981 in November, official figures showed, underlining the fragile state of the economy.

Output fell 7.4% from a year earlier - the biggest drop since June 1981. On a monthly basis, the fall was 2.9%, the Office for National Statistics said.

The news is likely to reinforce expectations that policymakers need to do more to stave off a deep recession.

The Bank of England cut interest rates to 1.5% on Thursday, a 315-year low.

James Knightley, an economist at ING said that the UK economy could shrink by around 3% this year.

We are in a very painful recession
Robert Peston, BBC business editor

"Industrial output has now fallen for nine straight months, which is the worst run of data since 1980, so the pressure for further stimulus will continue," he said.

Bad times

The weak figures hit the pound, which briefly fell against the euro and the dollar.

Paul Dales, UK economist at Capital Economics, said that manufacturing was likely to continue to plunge despite the weaker pound, which should make UK goods more competitive on international markets.

"It's not a good time to be in industry," he said.

Industrial production accounts for around a fifth of our economic output, says the BBC's business editor Robert Peston.

He said the figures confirmed that the UK was in a very painful recession.

This week, car manufacturer Nissan said it would cut around 1,200 jobs, a quarter of the workforce at its Sunderland plant, and china and glass group Waterford Wedgwood went into administration.

Data released at the same time showed that producer output prices were unchanged in December from November, although analysts had expected a fall.

Input prices fell 2% due to falling raw material costs.

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