Manufacturing output fell for the sixth successive month in August, shrinking by 0.4 per cent, further heightening fears over the health of the UK economy.

The weaker-than-expected figure marks the longest run of falling manufacturing output since 1980.

Manufucturing activity is now 1.9 per cent lower than in August last year, official figures show, as manufacturers grapple with falling consumer demand.

Even the tumbling pound, which could have provided a filip to exporters as their goods became cheaper abroad, has failed to have much impact as the downturn in the European and US economies has also curbed overseas demand.

The wider measure of industrial production, which counts for just under a fifth of Britain's economy, fell by 0.6 per cent in August, taking the annual decline to -2.3 per cent, the biggest drop since March 2005.

Paul Dales, of Capital Economics, said that today's figures were a sign that the economy has entered recession. "This would be just about enough to reduce overall GDP growth from 0 per cent in the second quarter to -0.1 per cent in the third, and therefore push the UK into recession."

A recession is defined as two quarters of negative growth.

There are also concerns that the financial turmoil will further exacerbate the difficult climate for manufacturers.

Howard Archer, chief UK and European economist at Global Insight, the economic consultancy, said: "The likely marked dampening impact on the UK and global economies stemming from the heightened financial sector turmoil can only add to manufacturers' problems."

Today's grim data is likely to strengthen calls for the Bank of England to cut rates by a half point on Thursday. The CBI and British Chambers of Commerce yesterday said that such a move was necessary to head off the possibility of a deeper and more prolonged recession.

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