"Today's manufacturing output figures show a very modest improvement but the sector remains under serious pressure. Manufacturing output rose 0.4% in November, in line with market expectations. The modest November rise comes after three declines in a row and compares with a sharp decline of 0.8% in October. Today's figures do not yet signal a sustained recovery. Manufacturing remains firmly in negative territory. In the three months September-November, manufacturing output recorded a 0.8% fall over the previous three months, and was almost 1.2% below its level in the same period a year ago.
"The manufacturing sector's persistent failure to sustain a meaningful recovery is a cause of acute concern. The BCC's economic forecast, which assumes a gradual improvement from now onwards, is now pointing to manufacturing output falling some 0.5-0.6% in 2005 as a whole, and a negligible increase of less than 1% in 2006. But there is a clear risk of a worse outcome."
David Kern concluded: "The manufacturing sector's acute underlying weaknesses, reinforce our view that the authorities must act forcefully to support the sector. The Chancellor must remove the threat of further tax increases on business. We also believe that we need a further interest rate cut in the very near future. The financial markets do not expect a repo rate cut today, but we strongly urge the MPC to act without undue delay. The economy is weak, and confidence is under pressure. Alleviating the plight of manufacturing, and countering the downward pressures on the economy, are now key priorities."