British manufacturing declines in November

Bloomberg

Output dropped 2.9 percent in November, matching the biggest drop since 2002, the Office for National Statistics said Friday in London. A separate report showed producer prices rose 4.7 percent in December from a year earlier.

The Bank of England cut the benchmark interest rate Thursday to 1.5 percent, the lowest in its history, to stave off the threat of deflation as world economies slump. Policy makers forecast a "sharp slowdown" in U.K. economic growth as banks restrict the availability of credit.

"This provides ... evidence that activity is grinding to a halt in the U.K.," said Alan Clarke, an economist at BNP Paribas in London. "There’s a risk of another big move in rates if there’s enough shocking data like this."

Factory-gate prices were unchanged in December from a month earlier, the statistics office said.

Manufacturing, which accounts for 14 percent of the economy, fell for a ninth month. It dropped 3.3 percent in the quarter through November from the previous three months, also the biggest drop since 1980, the report showed.Twelve out of 13 categories of factory production dropped on the month, led by chemicals and man-made fibers, transport equipment and basic metals, the statistics office said.