Output Figures Dash Hopes Of Quick Recovery

The latest official output figures for the manufacturing sector have largely dashed hopes that the recession will be over in the short term.

There was a shock 0.7% contraction during April, according to the Office for National Statistics - following the previous month's rise of 0.9%.

Analysts had expected to see growth.

Mark Lee, head of manufacturing at Barclays, said: "The harsh realities are hitting home.

"UK manufacturers are focusing on achieving greater cost efficiencies as orders from our biggest trading partner, Europe, remain flat at best."

Wider industrial production output remained unchanged in April but this was largely helped by a boost from energy output caused by the cold weather as the country turned up the central heating.

A 13.6% month-on-month surge in electricity and gas usage during the coldest April since 1989 was offset by a 6.4% fall in oil and gas extraction caused by the closure of a North Sea platform after a gas leak.

Alan Clarke, economist at Scotiabank, said the chilly weather saved the UK from an industrial production "bloodbath".

The lacklustre data is expected to reinforce demands for the Bank of England to increase quantitative easing (QE) to help the UK's ailing economy.

The bank has pumped £325bn into the UK economy to date through its asset purchase programme but rejected pressure to increase the amount earlier this month.

It fears stoking stubbornly high inflation although monetary policy committee member Adam Posen has suggested the Bank expands QE to include company loans.