Interest rate cut 'likely' after weaker manufacturing figures

Weaker-than-expected manufacturing figures are fuelling the argument for the Bank of England to cut interest rates next month.

Data from the Office for National Statistics shows output from UK manufacturers fell by 0.9% during January.

Analysts had been pencilling in figures ranging from a fall of 0.3% to a rise of 0.3%.

The weakness, which follows December's gains, was attributed to a fall in mobile phone production.

David Page, economist at Investec said the figures were "surprisingly weak".

He added: "We are starting to see some slowdown from the US.

"It adds to the argument for the Bank of England to cut rates in April."

John Butler, UK economist at HSBC bank said: "The data was particularly weak and could be the first signs of a US slowdown or global slowdown having a knock-on effect.

"The manufacturing sector would be expected to be hit first, and also the hi-tech industries."

Commenting on whether the figures would make a rate cut more likely, he said: "I'm not sure about a cut next month but it does make an near-term interest rate cut more likely. We expect the next move to be May, but it does increase the likelihood of an April cut."

The Bank of England shaved a quarter point off rates in February, bringing the cost of borrowing down to 5.75%. Yesterday, the Bank's Monetary Policy Committee decided to leave rates on hold for March.