Poor British economic data points towards deep recession
The latest round of poor British economic data signalled Tuesday the country will experience a deep recession that could spark even more sharp interest rate cuts, analysts said.
By Agencies |
LONDON: The latest round of poor British economic data signalled Tuesday the country will experience a deep recession that could spark even more sharp interest rate cuts, analysts said.
British manufacturing output sank 1.4 percent in October from September, the eighth monthly drop in a row, and was down 4.9 percent on a 12-month basis, the Office for National Statistics (ONS) said in a statement.
The monthly fall was the largest decline since March 2005 and means the country now faces the longest consecutive contraction in manufacturing output since 1980.
The readings were also far worse than market expectations for a 0.5 percent monthly and a 3.5 percent annual decline.
The ONS said that a wider measure of industrial production, which includes mining, quarrying and energy, plunged 1.7 percent in October from September and was down 5.2 percent year-on-year.
At the same time, the ONS revealed that Britain's trade-in-goods deficit with the rest of the world widened to 7.8 bn pounds (9.0 bn euros, 11.5 bn dollars) in October.
The figure compared with a revised deficit of 7.4 bn pounds in September, which had originally been 7.5 bn pounds. Analysts had forecast an October deficit of 7.5 bn pounds.
"October's UK industrial production and trade data confirm that activity all but fell off a cliff at the start of the fourth quarter," said Paul Dales, UK economist at the Capital Economics consultancy in London.
Recent data showed that Britain's economy shrank 0.5 percent in the three months to September.
Another consecutive quarterly contraction in the current fourth quarter would place the country in a technical recession.
"Overall, these figures support other evidence that GDP (gross domestic product) may contract by around 0.8 percent in the fourth quarter," Dales said.
"The recession is clearly deepening and the downside risks to our forecast that GDP will fall by 1.5 percent next year are growing."
British manufacturing output sank 1.4 percent in October from September, the eighth monthly drop in a row, and was down 4.9 percent on a 12-month basis, the Office for National Statistics (ONS) said in a statement.
The monthly fall was the largest decline since March 2005 and means the country now faces the longest consecutive contraction in manufacturing output since 1980.
The readings were also far worse than market expectations for a 0.5 percent monthly and a 3.5 percent annual decline.
The ONS said that a wider measure of industrial production, which includes mining, quarrying and energy, plunged 1.7 percent in October from September and was down 5.2 percent year-on-year.
At the same time, the ONS revealed that Britain's trade-in-goods deficit with the rest of the world widened to 7.8 bn pounds (9.0 bn euros, 11.5 bn dollars) in October.
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The figure compared with a revised deficit of 7.4 bn pounds in September, which had originally been 7.5 bn pounds. Analysts had forecast an October deficit of 7.5 bn pounds.
"October's UK industrial production and trade data confirm that activity all but fell off a cliff at the start of the fourth quarter," said Paul Dales, UK economist at the Capital Economics consultancy in London.
Recent data showed that Britain's economy shrank 0.5 percent in the three months to September.
Another consecutive quarterly contraction in the current fourth quarter would place the country in a technical recession.
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"Overall, these figures support other evidence that GDP (gross domestic product) may contract by around 0.8 percent in the fourth quarter," Dales said.
"The recession is clearly deepening and the downside risks to our forecast that GDP will fall by 1.5 percent next year are growing."
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The Bank of England (BoE) last week slashed its key interest rate by a full percentage point to 2.0 percent, the lowest level since 1951, as it sought to fight the threat of a sharp economic downturn.
The December rate cut followed a record 1.50 percentage point reduction in November, a dramatic effort to slow an accelerating slide into an economic slowdown that has been compared to the 1930s Great Depression.
"The extremely sharp contraction in industrial production in October heightens concern about the potential length and depth of the recession and intensifies pressure on the Bank of England to deliver yet another hefty interest rate cut in January," said IHS Global Insight economist Howard Archer.
"We currently forecast the Bank of England to reduce interest rates by a further 75 basis points ... to 1.25 percent in January but another 100-plus basis point cut is highly possible if the economic downturn continues to deepen."
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