Coal-powered plant in the UK
Coal-powered plant in the UK

UK industry slips into recession in first quarter of 2016

11 May 2016

Total production from the manufacturing, mining and quarrying and energy supply industries fell by 0.4% in the last quarter, putting UK industry into recession, according to the government’s latest figures.

This marks the second quarter in a row in which output has declined – a 0.4% drop in production was also recorded for the three months to December 2015, according to the Office for National Statistics’ quarterly bulletin.

The largest contribution to the quarterly decrease came from mining and quarrying across the UK, which fell by 2.3%. Within manufacturing the largest contribution to the decrease came from the manufacture of coke and refined petroleum products, which dropped by 12.1%.

David Kern, chief economist at the British Chambers of Commerce said that figures show that manufacturing and total industrial output are “in negative territory”.

“While adverse global conditions remain a major challenge for manufacturing, this is now being exacerbated by a slowdown in the domestic economy,” he added.

“A healthy manufacturing base remains critical to the wellbeing of the UK economy in key areas such as innovation, exports and productivity, making it vital that the sector is given more support to compete against global and domestic headwinds.”

Earlier this month CIPS/Markit’s UK Manufacturing Purchasing Managers’ Index revealed that growth in the UK manufacturing sector slumped into negative territory for the first time in three years.

Responding to today’s figures, Chris Williamson, Markit’s chief economist, said that the goods-producing sector acted as a drag on the wider economy in the first quarter of 2016 and looks set to do the same in the second quarter.

“PMI surveys of manufacturing, services and construction point to GDP rising at an equivalent quarterly rate of 0.1% in April. Growth could be even weaker if the surveys disappoint in coming months, which seems probable given the intensifying uncertainty over the outcome of the EU referendum.”

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