Sharp fall in British manufacturing a surprise

British manufacturing recorded its sharpest month-on-month output fall for nearly three-and-a-half years in January as mobile…

British manufacturing recorded its sharpest month-on-month output fall for nearly three-and-a-half years in January as mobile phone production fell back from high December levels.

According to British government statistics released today mobile phone-makers cranked up output in December to satisfy heavy Christmas demand.

But production by electrical and optical equipment-makers dropped back 4.8 per cent in January.

This pushed manufacturing into its largest monthly fall since August 1997.

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Economists said the figures did not reflect a widespread slowdown in manufacturing activity and should not be a cause for alarm.

"The figures are dreadful at first sight but I don't think this is due to inventory build-up or global outlook," said Mr Geoffrey Dicks of Royal Bank of Scotland.

"If the mobile telephony sector is stripped out the number's aren't so bad", he said.

Annual production by Britain's manufacturing sector - which accounts for about a fifth of the overall economy - rose 1.5 per cent for the year.

The wider measure of industrial output - which includes energy production - was unchanged on the month to stand 1.1 per cent higher than a year ago.

The figures were well below consensus forecasts. Economists had predicted monthly manufacturing growth of 0.2 per cent to stand 2.3 per cent higher for the year.

Industrial output had been forecast to rise 0.4 per cent in January to stand 1.3 per cent higher for the year.