Reacting to the publication by the Office for National Statistics (ONS) of Industrial and Manufacturing Output figures for August 2005, David Kern, Economic Adviser to the British Chambers of Commerce, said:

"Today's manufacturing output figures were again very disappointing and worse than the market expected. The sector continues to stagnate. After the minimal increase seen in July, manufacturing output fell 0.2% in August. The sector is persistently failing to sustain a meaningful recovery. Today's figures also confirm that the sector was in technical recession in the first half of 2005.

"In the latest three months June-August, manufacturing output has risen by 0.6% compared with the previous three months, but was still 0.3% lower than a year earlier. According to the ONS, the trend estimate for manufacturing output shows an annual growth rate of -1%. The threat of renewed manufacturing recession is very real. The BCC's economic forecast signals negative manufacturing growth for 2005 as a whole, even if we assume a gradual improvement from now onwards."

David Kern concluded: "The manufacturing sector's acute underlying weaknesses reinforce our view that we will need further interest rate cuts later in the year. We did not call for, or expect, a further interest rate cut today. But the economy has weakened further since last month, and confidence is faltering. Alleviating the plight of manufacturing, and countering the downward pressures on the economy, are now key priorities. As well as expecting the MPC to maintain a flexible stance, we wish to see firm action from the Government to support manufacturing."