April 7, 2009 / 8:45 AM / 11 years ago

Factory output falls less than expected

LONDON (Reuters) - Manufacturing output fell less than expected in February but that still marked the 12th straight month of declines, the longest stretch of losses since the recession of the early 1980s.

A worker operates machinery at the Closed Loop recycling plant in Dagenham east London in this file photo from February 17, 2009. REUTERS/Luke MacGregor

The Office for National Statistics said Tuesday that manufacturing output fell 0.9 percent on the month, less than the 1.5 percent drop analysts had forecast.

That took the annual rate of decline to 13.8 percent, its biggest since January 1981 as almost all sectors are suffering from a collapse in global trade.

“It may well be that the numbers around the turn of the year were extraordinarily weak. As factories start opening up after those shutdowns, the pace of contraction will be less,” said Alan Clarke, UK economist at BNP Paribas.

There was little market reaction.

The ONS said car production and metal products had been particularly hard hit in February.

The broader measure of industrial production, which makes up nearly a fifth of the economy, also fell less than expected, by 1.0 percent on the month. That took the annual rate of decline to 12.5 percent, its biggest drop since records began in 1968.

The economy fell into recession in the second half of last year and these latest figures indicate that overall output has continued to fall sharply.

“That is a little less sharp than the market was expecting but the trend is unmistakeably downwards,” said Stephen Lewis, chief economist at Insinger De Beaufort.

“I think the UK manufacturing industry has benefited to some small extent from the depreciation of sterling over the past year,” he said. “But the benefits from that have probably been largely seen already and we may not get very much more benefit from that side.

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