More disappointing statistics have reinforced fears that the economy is slipping back into recession. Official figures showed that manufacturing output fell by 0.3% in August, a third successive monthly decline. Year-on-year, growth was up by just 1.5%, the weakest pace in 18 months.
Like-for-like retail sales rose by an annual 0.3% in September, but real spending remains down on last year. In the three months to August, unemployment rose to 2.57 million, a 17-year high. The jobless rate hit a 15-year high of 8.1%. The National Institute of Economic and Social Research said growth is still 4% below its pre-recession peak. This recovery is on track to being the weakest since the First World War.
What the commentators said
Manufacturing has been losing steam for months as the global and domestic outlooks have clouded over. Prospects for an offsetting boost from consumption, which comprises around 60% of the economy, are not promising. “I don’t think I’ve ever seen consumers squeezed so much,” said Peter Marks of the Co-Operative Group. With inflation far above paltry annual earnings growth, real incomes are being squeezed.
The pain for consumers “is about to get worse”, said Russell Lynch in the Evening Standard. When the share of household spending on food, housing and utility bills rises, the economy slows. At almost 33%, this indicator “is well into recession territory”. The UK economy is heading “back into the sick bay”. The latest batch of QE has “not arrived a moment too soon”, says Lex in the FT. Unfortunately, as we point out, it’s unlikely to give the economy a significant kick.