Tuesday, 9 December 2008

UK manufacturing in a deep recession

It is strange, but I always thought that this recession would be centred on financial services. Instead, manufacturing seems to be taking most of the hit.

The October UK production number was horrific. Compared to September, industrial production shrank 1.6 percent. Compared to a year ago, production is down 5.2 percent.

Third quarter GDP recorded a fall 0.6 percent; the forth quarter is almost certainly going to be worse. It may well be that the UK economy records a decline in 2008; a fitting way to end to terrible year.


Anonymous said...

Perhaps the cheap taxpayer bailout loans are being used to preserve useless jobs in financial services, while manufacturing goes to the wall.

B. in C.

Anonymous said...

Would the effect of the trashed pound have filtered through to the factory floor by October?

Nick von Mises said...

It's here in financial services but not especially visible in stats. Examples

- Mass hedge fund closures, and zero performance fees. That's all in St James Square.
- No issuance of CDOs or MBS since summer 2007. Those happened mostly in the City.
- Countless mortgage brokers going to the wall

Anonymous said...

Hi Alice,
Housing, construction, retail, motors all are hit. The manufacturing downturn is following the pattern of the 1990 cycle when output fell by as much as 7% and continued to fall for a further twelve months.

Durables and metals particularly hit. There is worse to come. We are entering a deep recession.