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Output in UK continues to go south

MANUFACTURING output in the United Kingdom declined in February for the 12th consecutive month, although at the slowest rate in half a year, the government said yesterday.

A separate report from the British Chambers of Commerce, meanwhile, showed gloom among manufacturers reached record levels in the first quarter but detected an improvement in confidence in the services sector.

Output fell 0.9 percent between January and February, leaving it 13.8 percent lower than a year ago, the Office for National Statistics said. The agency cautioned, however, that month-to-month changes are notoriously volatile.

The biggest output drops were 3.7-percent declines in both the transport equipment industry and the nonmetallic mineral products sector.

For the three months from December to February, the seasonally adjusted index for production output fell by 5.8 percent compared with the previous three months and was 11.1 percent lower than the same three-month period a year earlier, the agency said.

"Even the benefit to UK manufacturers coming from the sharp depreciation in the pound is so far being outweighed by sharply deteriorating domestic demand in key export markets, notably the euro zone and the US," said Howard Archer, chief European economist at Global Insight.

The Chambers of Commerce Survey found that 20 percent of manufacturers were operating at full capacity, down from 29 percent in the fourth quarter of last year.

In services, 38 percent of firms said they were at full capacity, up 2 points from the previous quarter.

Record lows

The survey said the numbers of manufacturing firms planning to increase capital investment and spend more on training dropped to record lows.

"The authorities must act forcefully on a broad front to alleviate the recession and help rebalance the economy toward exports and investment. Quantitative easing must be pursued aggressively," the Chambers of Commerce said, referring to the Bank of England's policy to buy assets from banks to increase the amount of money in the economy and boost lending.

It also called for government spending cuts in the medium term, and for a lighter regulatory burden.


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