Factory output decline raises UK manufacturing worries

Fears were growing for the health of Britain's manufacturing sector today after official figures showed another drop in factory output there.

The decline – the third in as many months – was stronger than expected with output down by 0.8% between July and August.

Experts said the data provided the strongest evidence yet that manufacturers were back in the doldrums after signs of recovery earlier in the year.

Soaring raw material costs – fuelled by sky-high oil prices – and weak demand from overseas were blamed for today’s latest disappointment.

It is likely to ensure interest rates stay on hold at 4.75% for a little longer – possibly until early next year, according to some City economists.

The CBI’s head of economic analysis Doug Godden said: “On their own monthly figures are very volatile but the pattern now coming from a host of data and surveys is clear – underlying conditions facing manufacturing have taken a turn for the worse since the early part of the summer.”