Manufacturing output in the UK fell by a worse-than-expected 2.9 per cent in November, showing its sharpest decline in nearly 30 years, according to official figures published this morning.

The figures underline the troubled state of the UK economy and come a day after the Bank of England cut interest rates to 1.5 per cent, their lowest level in the Bank of England's 314-year history.

The 2.9 per cent fall, above analysts' expectations of a 1.5 per cent drop, is the ninth consecutive decline in manufacturing activity and marks the worse run of data since the early 1980s.

Year-on-year manufacturing output was down 7.4 per cent, against forecasts of a 6 per cent fall.

The annual drop in manufacturing output was the largest since June 1981 when there was a 7.6 per cent fall.

The 2.9 per cent decline marked the biggest monthly dip since June 2002, when the reorganisation of bank holidays for the Queen’s Golden Jubilee saw output plunge 4.5 per cent month on month.

Output fell in most manufacturing sectors, with a 5.3 per cent decline in transport equipment industries and a 4.6 per cent drop in basic metals and metal product industries, reflecting the troubles of Britain's car industry.

Output from companies making vehicle bodies and parts was more than 18 per cent below the previous year in the three months to November.

In a sign that the slump in the housing market was taking its toll on related industries, manufacturers of bricks, cement and plaster saw output plunge by almost 26 per cent below 2007 rates in the three-month period.

Howard Archer, chief UK and European economist at HIS Global Insight, described the data as “breathtakingly awful,” noting the figures were substantially worse than even the most pessimistic forecasts. Analyst had expected a drop of about 0.7 per cent.

However, factory gate inflation, the prices at which manufacturers sell their products, fell from 5.1 per cent in November to 4.7 per cent in December, while output prices for all manufactured products was unchanged, as oil prices continued to fall.

Petroleum product prices dropped by 7.4% in the year to December, the highest rate of annual decline since October 2006, the Office for National Statistics said.

The falls came after the cost of oil dived to a third of the record $147 a barrel reached last July.

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