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The manufacturing sector is facing its toughest conditions since Britain's last recession in 1992 after activity in September fell for a fifth consecutive month when output, new orders and employment shrunk at record rates.
A key survey by the Chartered Institute of Purchasing and Supply (CIPS), which measures the health of the manufacturing sector, fell to a record low of 41.0 in September.
Today's data follow yesterday's confirmation by the Office for National Statistics that the British economy had failed to grow in the second quarter, raising fears of contraction in the third quarter and the beginning of recession in the UK.
CIPS said today that September data indicate that "UK manufacturers are currently facing the toughest operating conditions" since the survey began in 1992.
Domestic demand for manufacturers' goods was particularly affected by the downturn in the credit, housing and construction markets, which led to an increase in customers cancelling or delaying orders.
At the same time, new export business dampened overseas business, with activity in September falling to a seven-year low.
The CIPS survey also revealed that employment levels are suffering because of the slowdown in manufacturing. The employment index showed a reading of 40.1, indicating that companies are laying off staff and choosing not to replace departing workers.
On the upside, the price of producing goods fell in September from a reading of 78.1 in August to 73.7 as the declining price of oil and commodities fed though to input cost inflation. However, input inflation remains high and above the survey's average.
Howard Archer, chief UK and European economist at Global Insight, described the figures as “simply awful.”
He said: "Weakening productivity in the first half of 2008 is yet more disappointing news for Gordon Brown and Alistair Darling, as the Government has placed high importance on boosting UK productivity."
Mr Archer added: "Clearly, the further marked slowdown in productivity in the second quarter of 2008 was influenced significantly by GDP only stagnating as well as by companies holding on to workers.
"Nevertheless, the marked retreat in productivity over the past year raises the question as to whether the overall improvement in 2006 and the first half of 2007 was largely a cyclical pick-up, rather than the result of some structural improvement helped by streamlining in the manufacturing sector in particular."
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I worked at Land-Rover until July this year. Vehicles will still be rollling out of Lode Lane, its sub-build - i.e. chassis parts, and spares like bonnets, tailgates, doors etc, that will stop.
I am now in Australia where the economic situation here is little better.
Tom, Perth,
People don't seem to get the message, if the credit crunch was the only problem. What's happening in the world is meltdown. Food shortages, money shortages, oil shortages, job shortages & high levels of poverty. This is the end the party has been over for years people spending what they don't
have
Daphne Kenward, Cambridge, UK
The balance of payments is not now much mentioned, but if the City goes down the drain as it seems to be doing, we will have to stop shopping abroad.
"Buy British" , Chesterfield, UK
"still be paid for shifts on the days when production is halted"
I sincerely hope all goes well for my good friends and the good people at Land Rover. Indeed I sincerely hope all goes well for all people in UK and the rest of the world.
Remeber to respect, remain calm & be at peace with yourself
NDG, Tokyo, Japan
Manufacturing will have a strong revival in Britain. The reason Chinese goods are cheap is transportation costs were ridiculously low in the era of cheap petroleum. Plus pollution during transportation was not priced. We will soon come to an era where goods are designed globally but produced locally
Kara Swart, London, UK
I agree we produce nothing but paper in the form of worthless financial instruments. We need to look at state aid again for manufacturing and try and become more self-sufficient.
If its OK for banks to get govt subsidies why not manufacturers?!
darren, London,
now that steel is at a premium we find that some short-sighted idiot sold off our steel industry. Maggie?
peter c, Devizes, Wessex
With reference to Charlie in Munich.
China,Eastern Europe & India may manufacture things cheaper,but the quality of anything,particularly from China in my experience is absolute rubbish in quality.
dick sweeney, London,
If there is no money people can't buy things its as simple as that whether it be houses, cars or anything else. The Banks are basically bust. Interest rates will go up due to massive Govt debt and limited supply of money. Rate of growth will slow and living standard down. Unemployment will go up.
Rupert, London, UK
Another nicely researched article - Land Rover is dropping to a 4 day week with only 4x4 models produced......Land Rover only produces 4X4 vehicles...what were they building on that fifth day I wonder...?
Brian, London,
Under Labour they had the 3 day week, we have New Labour we have the 4 day week. Time before that we had Grave diggers on strike, and the bin men. Now we are heading towards electricity supply only 3 day a week and that is Nationally. We ain't seen anything yet, bailout banks, your money worthless.
Daphne Kenward, Cambridge, UK
Each country print their own worthless currencies, while the government own all the stocks including housing. We own bits pf paper that is not worth as much as toilet paper. Dont trust the crooks, dont let them run your lives.
Daphne Kenward, Cambridge, UK
Green taxes on vehicles are already working! No more cars produced and no one going to work everyday. This will cut our carbon footprint alright. You could'nt make it up.
Colin, Brightlingsea, England
Backwards? That's not backwards, Jamie. Just a wake up to reality if it happens. What you call forwards is wonderful until we all, like lemmings, reach the cliff edge. Then what? Doesn't anybody believe any more in the first law of nature? Like, what goes up must come down?
Bryan, Achnasheen, UK
What is the point of manufacturing things when China, Eastern Europe and India can make them for far less. The only industries that can compete are the service industries and design/precision.
Charlie, munich,
Brilliant. Now if every industry follows the 4 day working week, finally families may actually have time to spend with each other, people may be able to pursue hobbies and with any luck stress levels may fall. People may work to live instead of living to work!
Farrukh, Woking,
the BOE cutting interest rates is an irrevelance. The banks are just not lending, the rate is academic. Until confidence is restored the situation will worsen. 6% over base is now a standard overdraft rate for small business rising to 12% over base and that's if they can get an overdraft.
grant, shrewsbury, england
Phew! Sooo reassuring to know we have Gordon at the helm to guide us through these difficult and challenging times. How much worse could this situation be in the hands of a novice.
colin, wolverhampton, UK
No, Unions killed off British manufacturing. Building factories now will not create competitive, exportable goods that solves unemployment levels. We must support the banks or go backwards till there're few enough of us to live on subsistance farming.
Jamie, London, UK
Manufacturing still accounts for a fifth of our economy with exports like whisky and aerospace huge currency earners. Just like, er, the City of London. Manufacturing has had to move up the value chain to survive - look at the thriving precision medical instruments sector in Sheffield, for example
Dougal Paver, Liverpool, UK
The media are dying to say that we're in a recession. Until then we have to have "recession fears", "recession nears", "on the brink of recession". Talk about a self-fulfilling prophecy.
Tony, Islington, London, UK
It's no wonder the nation is nearly bankrupt when successive governments, and the current incumbents in particular, have allowed manufacturing to run down to the point where it is no longer viable. Brown's love affair with all things financial has been the final nail in the coffin.
A.Williams, Cradley Heath,
What manufacturing in Britain? Under Thatcher and Blair virtually all manufacting has disappeared.
Will little to export how will we pay for energy, food and necessary manufactured imports?
Brown's current money to burn, propping up banks, could have been used to fuel up our manufacturing.
roy ormond, skipton,