Manufacturing at slowest rate for 7 months

By HUGO DUNCAN FOR THE DAILY MAIL
Updated: 20:06 EST, 3 May 2011

The manufacturing boom lost steam last month, fuelling fears that the best of the industrial recovery has passed.

Factory output increased at its slowest rate for seven months in April as strong export orders were overshadowed by weak demand at home.

High street sales were also sluggish as the economy struggled to pick up after six months of stagnation since last summer.

Weak: Factory output increased at its slowest rate for seven months in April

The pound sank against the dollar and the euro as traders bet the Bank of England will leave interest rates at 0.5 per cent when its latest meeting ends at noon tomorrow.

The monetary policy committee is deeply divided over whether to raise rates to control inflation or leave them at record lows to bolster economic growth.

‘We think it unlikely that the Bank will move before November and it could quite easily be 2012 before we see the first increase in interest rates,’ said Andrew Goodwin, senior economic advisor to the Ernst & Young Item Club.

That would be good news for borrowers but a blow to savers who have lost out since rates hit rock bottom in March 2009.

The index of manufacturing by the Chartered Institute of Purchasing and Supply fell from 56.7 in March to 54.6 in April. The reading has now been above 50 – the cut off between growth and decline – for 21 months in a row but is well below the record 62 reached in January.

‘The best days of the industrial recovery are behind us,’ said Samuel Tombs, UK economist at Capital Economics. CIPS chief executive David Noble said the gloomy survey ‘will definitely send a shiver down the spine of many’.

The CBI reported an un-spectacular increase in retail sales in April but said the outlook is grim.

‘Despite slightly better sales growth in April, things are far from rosy on the high street,’ said CBI chief economic advisor Ian McCafferty.