October 11, 2011 / 8:36 AM / 8 years ago

Factory output growth weakest since February 2010

Workers talk to each other on the production line at the Diageo owned Shieldhall bottling plant in Glasgow, Scotland March 24, 2011. REUTERS/David Moir

LONDON (Reuters) - Manufacturing output grew at its slowest pace for 18 months in the year to August, continuing a loss of momentum that bodes ill for government hopes of export-driven growth.

A big monthly rise in output from the volatile oil and gas sector lifted the broader industrial output measure, but overall growth was broadly in line with economists’ expectations.

The Office for National Statistics said that factory output fell by 0.3 percent on the month — versus a forecast 0.2 percent fall — to take the annual rate of growth to 1.5 percent, the lowest reading since February 2010.

Industrial output rose 0.2 percent on the month, compared to forecasts for a 0.2 percent dip. On the year, output was still 1.0 percent lower.

Oil and gas output jumped by 2.3 percent on the month, its biggest rise since March 2010. The sector has been depressed in recent months due to disruption earlier in the year than usual from maintenance, and the Office for National Statistics said August’s rise represented an increase from a low base.

The figures confirm a recent weakening in business surveys and will raise concerns that Britain’s economy is slipping back towards recession, validating the Bank of England’s move to inject more stimulus into the economy to boost growth.

The British Chambers of Commerce (BCC) warned earlier on Tuesday that the economy barely grew in the third quarter and risks were growing, calling on the government to do more to

Britain’s manufacturing sector has been losing steam over the past few months as the global economy slowed and British companies and consumers held back in the face of renewed market turmoil and fears of recession.

The government and Bank of England had been relying on strong export-driven growth in manufacturing in 2011 to fill the gap created by cuts in government spending and belt-tightening by consumers.

Reporting by Sven Egenter and David Milliken

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