U.K. Production Slumps to 1992 Levels

Posted on Wednesday, October 7, 2009

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More traveling (halfway through a three week world tour) this afternoon, BUT will try to post TODAY (not tomorrow) on the upcoming consumer credit and Treasury budget release. In the meanwhile, some "yesterday's news" that seemed to have been lost in yesterday's Aussie rate hike, dollar cliff dive, equity / commodity spike.

Things in the U.K. are not only NOT getting better, but they are still deteriorating (in some cases to 17 year lows). Bloomberg details:

U.K. manufacturing production unexpectedly slumped in August to the lowest level since 1992, a sign the economy is struggling to shake off the recession.

Factory output dropped 1.9 percent from the previous month, the Office for National Statistics said today in London. Economists predicted a 0.3 percent increase, according to the median of 26 forecasts in a Bloomberg News survey. The index of manufacturing fell to 87.8, the lowest in 17 years.

Bank of England policy makers have cautioned that the credit squeeze and weak demand at home and overseas may hamper the economy's escape from the worst recession in at least a generation. The central bank will keep up its 175 billion-pound ($280 billion) asset-purchase plan this week as officials gauge the strength of the recovery, economists say.

The data are "shockingly bad," said Alan Clarke, an economist at BNP Paribas SA in London. "This starts to concern us that we're losing momentum a bit earlier than we'd feared. We're out of recession but it's far from good growth yet."

Who cares about the broader economy when equity and home prices are up? The result, expectations from the Nationwide survey show serious signs of optimism.