British industrial and manufacturing production both flat for October

Official figures released Tuesday show that industrial production and manufacturing production in the UK were both flat for October.

The figures from the Office for National Statistics, the government's statistical arm, said industrial production in Great Britain was unchanged in October from the previous month.

However, compared to the same month last year, production fell 8.4 percent. Economists had forecast a 0.4 percent monthly rise and a 7.7 percent year-on-year decline.

Manufacturing output was also flat in October, recording a 7.8 percent fall from the level seen in October 2008. Economists had forecast a 0.4 percent monthly rise and a 7.2 percent annual fall.

Commenting on the manufacturing output figures for October, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: "The failure of manufacturing to show any growth in October is disappointing and increases concerns that a return to growth in Q4 is not yet guaranteed. All the longer-term comparisons both three months and 12 months - show that manufacturing output is still declining.

"A recovery in manufacturing is critical in order to secure the much-needed rebalancing of British economy. To achieve that, the sector must be nourished, access to finance improved, and steps taken to enable firms to preserve their skills base. We expect Chancellor Alistair Darling's pre-budget report on Wednesday to make a significant contribution to this."

Separately on Tuesday, UK manufacturers themselves predicted production will decline somewhat in the next three months, contrasting with their optimism for a pick-up in the two previous surveys, the Confederation of British Industry (CBI) said.

In the latest CBI monthly Industrial Trends Survey, 18 percent of manufacturers thought output volume will rise over the next three months, while 25 percent believe it will fall. The -7 percent gap is the most negative since July, which was -14 percent, and marks a step back in optimism from the results of the past two monthly surveys.

The failure of output to sustain growth is a result of weakness in demand, said the CBI. A balance of -42 percent of firms said total order books were below normal

Export order books weakened again, however, reversing part of the improvement seen in November. A balance of -41 percent said they were below normal compared to -37 percent last month.

Ian McCafferty, CBI Chief Economic Adviser, said: "Manufacturing prospects were starting to look up but have dipped again in this latest survey. Output had been edging higher after the rapid stock depletion earlier this year.

"However with demand moving only slowly in the right direction, order books remain very weak and firms now expect production will fall back slightly in the next three months. This highlights the fragility of the recovery and the likelihood that economic activity will continue to bump along the bottom early next year."

The CBI represents several hundred thousands businesses, who together account for about two thirds of the nation's economy.

Earlier on Tuesday Britain's biggest mortgage lender, Halifax, said that the average price for a house rose 1.4 percent month-on-month during November in England and Wales.

The Halifax said the rise, which was the fifth consecutive rise in monthly house price sales making an unbroken chain back to June, was down to increased demand, which was not matched by an increased supply of homes for sale. The figures come in the wake of less gloomy forecasts from the BCC made on December 6. The BCC forecast unemployment to continue to rise over the next six to nine months but at a much slower pace.

The BCC forecast unemployment to increase from 2.46 million to a peak of 2.7 million, or 8.6 percent of the workforce, in mid-2010. This is a revision of the BCC's forecast made in September when it forecast a jobless peak of 3 million.

The BCC said UK GDP would fall 4.6 percent in 2009, followed by positive growth of 1 percent in 2010 and 2.3 percent in 2011. In its September forecast, it forecasted a 4.3 percent GDP fall in 2009, followed by increases of 1.1 percent in 2010 and 1.9 percent in 2011.

A BCC spokesman said: "Britain's fiscal position is unsustainable in the medium-term. Public borrowing is forecast to total 175 billion GB pounds in 2009-10 and 188 billion GB pounds in 2010-11, before easing to 169 billion GB pounds in 2011-12. Public debt is set to increase to dangerous levels, in excess of 90 percent of GDP. This debt can only be reduced through fiscal tightening, such as spending cuts and tax increases.

"Despite a 200 billion GB pounds Quantitative Easing program, growth in money supply and bank lending has been disappointingly weak. Given the risk of a double-dip recession, additional monetary stimulus and measures to boost lending are needed to sustain a recovery."

The figures come just a day before UK Chancellor of the Exchequer Alistair Darling delivers his annual pre-budget report to Parliament.

Chancellor Darling is expected to increase Value Added Tax to 17.5 percent, the level at which it was at in December 2008 when he cut it in a bid to stimulate the economy.

Source: Xinhua