Weak manufacturing performance raises concerns

Concerns over the UK's economic recovery have been fuelled by poor performance in the manufacturing sector.

Latest figures from the Office for National Statistics (ONS) indicate that output in the construction industry rose by only 0.1 per cent between December and January, a much slower growth than the 1 per cent rise reported the previous month.

Comparing the three months from November 2011 to January 2012 with the same period the previous year, the ONS figures show that the volume of construction output grew by only 0.6 per cent. Output in new work, and repair and maintenance, the two main components which make up the ONS' construction industry figures, rose by 0.7 per cent and 0.4 per cent respectively.

Commenting on the figures, the British Chambers of Commerce (BCC) acknowledged poor performance but noted that the unexpected decline came from 'erratic items' which were not overly significant. It did, however, comment that the data highlighted the difficulties facing struggling UK economy.

"Output has been virtually stagnant and although the economy has likely returned to positive growth in the first quarter, any improvement will be very weak," said the BCC's chief economist David Kern.

"But we mustn't be too gloomy," he continued. "A period of sluggish growth is to be expected at a time when tough austerity measures are being implemented, and the eurozone's problems create challenges for our exporters.

"Every effort must be made to sustain growth and help businesses to drive recovery. The Bank of England's Committee must find ways to make quantitative easing more effective in stimulating lending to businesses."

The BCC is now calling for the Chancellor to act 'quickly' to implement further credit easing measures - a total of £325 billion has already been injected into the economy - and to use the forthcoming Budget on 21 March to support struggling businesses.