By Marcus Leach
David Kern, Chief Economist at the British Chambers of Commerce (BCC) has said that today's (Friday) Index of Production statistics point to stagnation in the final quarter of 2012.
The Office for National Statistics (ONS) revealed disappointing figures, showing that industrial production grew by 0.3% in November, compared with October, but had been expected to grow more as some North Sea oil and gas resumed production following maintenance. Construction sector output contracted 3.4% in the month.
"The manufacturing figures were disappointing, showing a small fall while most analysts predicted an increase," Kern said.
"The small rise in total production was also weaker than expected, and the decline in the volatile construction sector is concerning. Taken together, the figures will reinforce the concern that the ONS will announce later this month a small decline in GDP, and this could be damaging to business confidence.
"Such an outcome is not inevitable, particularly given the relatively positive results shown by our recent survey*. The construction sector will still make a positive contribution to Q4 GDP, in spite of the fall, but overall the picture remains one of disappointing stagnation in the UK economy.
“Manufacturing remains a significant sector of the UK economy, and has coped remarkably well with the challenges facing it in recent years. Whilst weak growth in world trade will limit the scope for a significant expansion in manufacturing exports, the sector remains competitive and well-managed, and has the potential to recover.
"Many manufacturing firms have been able to maintain their skill bases in the recession, and are now adjusting to a more difficult economic environment of low growth. But British businesses have the will and ability to make progress, if given the right backing, so the government must do more to provide firms with the confidence to drive a sustainable recovery."
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