LONDON, Dec 7 (Reuters) - British manufacturing output fell
in October at the fastest pace since June when extra public
holidays dented production, data showed on Friday.
KEY FIGURES FOR OCTOBER INDUSTRIAL PRODUCTION
OCT SEP F'CAST
Manufacturing %MM -1.3 UNCH (0.1) -0.2
Manufacturing %YY -2.1 -1.7 (-1.0) -0.2
Industrial %MM -0.8 -2.1 (-1.7) 0.7
Industrial %YY -3.0 -3.2 (-2.6) -0.6
- Biggest monthly and yearly falls in manufacturing output
- Steepest yearly fall in oil and gas extraction since
records began in Jan 1998
ROSS WALKER, RBS
'The weakness looks pretty broad-based. I mean, everything
seems to be have been clobbered ... We had an underlying
deterioation in the survey data but nothing on this scale.
'It's not obvious that the industrial sector would have been
a big beneficiary of the Olympics, whereas as you might have
expected a bigger level effect in some service industries, it's
not obvious why you would have seen that in manufacturing.
'Obviously there is weakness in the energy side as well but
that's less pronounced, the bigger fall is in the manufacturing
data and that's always the better gauge of underlying conditions
in the economy. It's a very bad number and it's not immediately
obvious why it is as bad as it is.'
On the prospect of more QE:
'February might be a bit too early but you certainly can't
rule it out. In general, here, the euro zone, even in the U.S.,
there does seem to be a loss of momentum again.
'I think the signal from the November Inflation Report was
that they seemed to move to a more neutral position, they raised
the inflation projection but this early data for Q4 seems to be
weaker than expected. If we do get any more policy action, it's
not going to tightening in terms of the next move.'
DAVID TINSLEY, BNP PARIBAS
'The latest release was shockingly bad.
'Some of the weakness today is likely to reflect partly
erratic, reflecting in part an unwind in the food sector from
Olympic-related activity (beer sales are sharply lower).
'There should also be a strong rise in oil and gas
production coming as the rigs come back on line - the cold
weather may also help utility output.
'But overall this is very bad news at the start of the
fourth quarter. We are looking for a drop back in GDP over the
quarter, and this data confirms this as likely.'
HOWARD ARCHER, IHS GLOBAL INSIGHT
'This is a dire set of data. While it has been evident that
the manufacturing sector is finding life very tough at the
moment, the 1.3 percent drop in output in October is far worse
than expected and very worrying.
'It means that industrial production fell by a further 0.8
percent in October and is set to be a significant drag on GDP in
the third quarter.
' Unless services output can enjoy a strong end to the year,
it looks increasingly inevitable that GDP will suffer a renewed
drop in the fourth quarter.'
MIKE RIGBY, BARCLAYS
'It has been a tough year for UK manufacturers as they
continue to be battered by depressed domestic demand and weak
demand from the euro zone.
'This week's Autumn Statement, however, brings better news,
with the focus on infrastructure investment and export support
providing much needed stimulus for our manufacturers.'
BRIAN HILLIARD, SOCIETE GENERALE
'Somewhat disappointing - a little bit out of line with what
the surveys were telling us. We've had a lot of volatility in
recent months over the Olympics, but we'd expected things to
settle down, so that is going to dampen people's views about Q4
'It's such a large move I wonder if there's not some special
factors there that we're not aware of... I would expect at least
stabilisation in coming months because we're getting signs of
that happening in continental Europe and I think that will help
to support UK output as well.'
ALAN CLARKE, SCOTIABANK
'Very disappointing - triple dip (recession) here we come.
Part of the weakness can be explained by the North Sea oil
platform which is undergoing maintenance.
'But manufacturing was diabolical. Sadly, I think there is
not a lot to suggest that it is temporary. Survey data has been
'The real game-changer is at the end of the month - the
monthly services data because that is three-quarters of the
'We had bad trade data earlier in the week, bad industrial
production today and employment next week is likely to cool off
further. More doom and gloom.'
PHILIP SHAW, INVESTEC
'These are really poor numbers. We had anticipated the
weakness of the oil and gas sector in October but not the extent
of the decline in the manufacturing sector.
'It really does now raise the prospects of a contraction in
the economy as a whole in the fourth quarter unless we see some
very good news over the next couple of months.
'Although the MPC left policy on hold yesterday, there will
have been a serious discussion yesterday about whether to
sanction more QE (quantitative easing).'
(Reporting by Li-mei Hoang, Peter Griffiths and Natalie Huet)
Keywords: BRITAIN MANUFACTURING/
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