Output fall ‘shows economy fragile’
Jul 8 2009 by Iain Laing, The Journal
MANUFACTURERS have seen another fall in output between April and May despite predictions the downturn was starting to bottom out.
Figures from the Office for National Statistics (ONS) show production dropped 0.5% from April to May. The downturn was extended into April as figures for that month were revised down from 0.2% growth to 0%.
Economists who had predicted a rise for the sector in May were taken aback.
They said the reversal was disappointing and would lead to renewed fears the economy as a whole had continued to slump. In its three-monthly figures, the ONS said production had fallen 1.2%. But this was compared with a 2.9% fall in April.
Howard Archer, of IHS Global Insight, said this undermined hopes the economy might have avoided contraction in the second quarter and “offers a clear reminder that the economy is still in a very fragile state despite improving significantly from the lows seen in the first quarter”.
He said manufacturers still faced serious obstacles and sustainable growth might be out of their reach for some time.
They have been helped by de-stocking and a more competitive pound. But the sector still faces low demand.
The ONS said the big falls were 2% in paper, printing and publishing and 1.7% in machinery.
James Knightley, of ING, said though the drop was disappointing, there was still “hope that the worst is over for the sector“ after positive survey data.
