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UK growth picks up, but manufacturing slumps

UK manufacturing "dropped like a stone" last month
UK manufacturing "dropped like a stone" last month

Britain's economy recovered in the third quarter to show growth of 0.5%, accelerating from 0.1% growth in the second quarter of 2011, official data showed today.

But weak figures from the manufacturing sector put a dampener on the improved growth data.

Gross domestic product (GDP) growth between June and September also grew by 0.5% compared with output in the third quarter of 2010, the Office for National Statistics said in a statement.

Britain's recovery was aided by stronger output for the manufacturing and service industries, which helped to offset contraction in the construction sector, the ONS added.

"Gross domestic product rose by 0.5% in the third quarter of 2011, driven by strength in the services sector in particular and the production sector. The construction sector showed a small decline," the office said.

Despite the better than expected headline GDP data, analysts said the outlook for Britain's economy remained bleak as the country comes up against high inflation, government cutbacks and the euro zone debt crisis.

UK manufacturing "dropped like a stone"

Figures from the manufacturing sector added to concerns about the UK's economic outlook, as a key measure of the sector's health "dropped like a stone" to a 28-month low.

A closely watched survey by Markit/CIPS, in which a score of under 50 represents contraction, dropped to 47.4 in October, down from 50.8 the previous month, and its lowest level since June 2009.

The report's authors said the most worrying aspect of the survey was that new orders declined at the quickest pace since March 2009.

Levels of output, new orders and employment were all lower than one month earlier as the crisis in the euro zone hit demand from overseas, while the UK market remained subdued amid the squeeze in consumer spending.

The sector has now signalled a deterioration in overall operating conditions for three out of the last four months.

CIPS chief executive David Noble said the survey showed the sector's activity had "dropped like a stone" and added that the mood is "somewhat sombre".