UK manufacturing output in three months to February recorded the largest decrease since the records began in 1968, official data showed Tuesday.

The Office for National Statistics reported 6.5% decline in UK manufacturing output during three months to February compared with the three months to November 2008. This was the biggest decline since 1968. Output was 12.2% lower than the same period a year ago.

In February, manufacturing production slipped 0.9% from the previous month taking the annual decline to 13.8%. Economists were looking for a monthly fall of 1.5% and an annual 14.2% drop in February. Annual fall in February was the largest since 1981.

Output decreased in eight of the 13 sub-sectors and increased only in five sub-sectors in the latest month. The monthly fall was mainly led by 3.7% fall in transport equipment industries and 1.6% fall in the basic metals and metal products.

Industrial production declined 1% month-on-month in February. Economists had expected output to fall 1.2% in February, following a 2.7% decrease in January.

Mining and quarrying output decreased 0.9% with a decrease in oil and gas production output of 0.6%. Energy supply output slid 2.4% on the month with decreases in the electricity, gas and water supply outputs.

Year-on-year, industrial production was down 12.5% in February, in line with economists' expectations. This was also the biggest drop on record.

Peter Dixon analyst at Commerzbank said the pace of decline is beginning to level off. Industrial production is likely to fall around 5.4% in the first quarter, which will deduct nearly one percentage point off GDP growth.

Commenting on the production data, David Kern, Chief Economist of British Chambers of Commerce said manufacturing is already too small and avoiding further irreversible losses must be a national priority. We urge the Chancellor to take corrective measures in the Budget.

Separately, the BCC said that the British recession is still very serious and expects it to continue for some time. The BCC forecasts more than 3% contraction in 2009 GDP. The business lobby sees peak of unemployment in the third quarter of 2010 with the number reaching 3.2 million.

According to a quarterly Economic Survey, the manufacturing sector's balances deteriorated again in the first quarter and reached record lows in almost all critical areas. The business lobby said there is a clear need for corrective action and urged the government to act forcefully to ease the recession.

UK Prime Minister, Gordon Brown met Bank of England Governor Mervyn King and Chancellor of the Exchequer Alistair Darling to discuss implementation of new regulations laid out in G-20 summit last week.

Reports said labor MPs urged Brown to spend more and announce measures to support the economy. Chancellor, Alistair Darling will present his Budget statement on April 22.

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