UK industrial production registers sharp fall in February

British industrial and factory output registered unexpected declines in February, led by a sharp fall in factory output.

Total industrial production decreased by 0.3% month-on-month, according to the Office for National Statistics.

Economists had forecast an increase of 0.3%.

Manufacturing production was weakest, falling by 1.1% versus January (consensus: +0.7%).

Output decreased in 11 out of 13 manufacturing subsectors, ONS said in a statement, with the largest drop seen in the manufacture of transport equipment, which decreased by 2.9%.

In comparison to a year ago, total industrial production was 0.5% weaker in February - the largest fall on record since August 2013.

Factory output was down 1.8% year-over-year, with production of machinery and equipment weakest after falling by 10.6%.

For the three months to February 2016, production and manufacturing were 10.6% and 6.8% respectively below their figures reached in the pre-downturn GDP peak in the first quarter of 2008, ONS said.

"February’s industrial production data bring another clear sign that the economic recovery is slowing. Even if we assume that industrial production holds steady in March—an optimistic assumption given the weakness of the manufacturing surveys—it would be 1.1% lower in Q1 than in Q4.

"As a result, industry would make a -0.16 percentage point contribution to quarter-on-quarter GDP growth in Q1, worse than its -0.05pp contribution in Q4. The industrial slump places more of the onus on the services sector to drive growth, but the weakness of the CIPS services PMI in both February and March suggests that all sectors now are struggling," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"The February trade and industrial production data provide a double whammy of very disappointing news for the UK economy that bodes ill for first quarter growth prospects. It reinforces our belief that GDP growth will have been no better than 0.4% quarter-on-quarter in the first quarter, down from 0.6% quarter-on-quarter in the fourth quarter of 2015," said Dr.Howard Archer, chief European+UK economist at IHS Economics.