Reality check as UK manufacturing suffers shock fall

UK manufacturing suffered a shock decline in November increasing fears of a contraction in the economy in the fourth quarter.

While the 0.3% fall in manufacturing in November was a significant improvement on October when it declined by 1.3%, analysts had forecast an expansion of 0.5%. Within this industrial production rose by 0.3%, lower than an expected 0.8% rise.    

The latest data is another reality check for the UK after the economy emerged from recession in the third quarter with 1% growth, thanks partly to the exceptional boost from the Olympic Games.

Commenting on the data, Schroders' European economist Azad Zangana said: 'The latest fall in manufacturing output highlights the challenges UK plants face. Weak export markets particularly in Europe have hit demand, although the recent rise in sterling is likely to have exacerbated the situation. The figures support our view that the UK economy overall contracted in the fourth quarter.'

The news put the brakes on the FTSE, which was a point weaker at 6,100 at mid-morning after starting the session positively.