Britain's hard-pressed manufacturing sector returned to its usual state of contraction in May after an unexpected output rise the month before, official data showed this morning.
The Office for National Statistics said manufacturing output, which accounts for about a fifth of economic output in the UK, fell 0.2 per cent in May from April to stand 2.1 pe rcent lower than a year earlier, the worst annual decline since last October.
The numbers were bang in line with analysts' expectations and financial markets showed little reaction.
The FTSE 100 index of leading shares remained around 40 points higher at 4,063 while gilts and interest rate futures remained lower on the day. The pound was steady on the foreign exchanges.
The Bank of England holds its latest monthly rate meeting this week and announces its decision on Thursday. A majority of analysts expect it to leave rates unchanged at their current 3.75 per cent level this month but to cut them to 3.5 per cent in August.
Manufacturing has been under the cosh for several years because of the strength of the pound against the euro and weakening world demand. The fall in the pound against the euro earlier this year is beginning to show up in order books but has yet to translate into higher production.
Within the manufacturing sector, half the sub-sectors showed monthly falls and half showed rises.