INTEREST RATES look set to stay on hold well into next year after figures yesterday showed that the manufacturing industry was headed for recession while the housing market was still in the grip of a boom.
The output from British factories slumped by 0.7 per cent in October, the Office for National Statistics said. This was much larger than expected and was the second successive monthly fall.
This took the total level of activity within manufacturing to its lowest level since June 1994 - apart from the one-off slump in June as factories shut for the golden jubilee.
The news came just hours after Halifax bank, the UK's largest mortgage lender, said house prices jumped 1.4 per cent to hit an annual rate of almost 30 per cent.
The fall in manufacturing output was driven by sharp declines for the pharmaceutical and motor vehicles industries - two sectors that had provided much of the rebound over the late summer.
Drugs and medicines production slumped 8.8 per cent thanks to sagging demand from overseas, making October the worst month since December 1999. This was echoed by the UK's car factories where a collapse in demand from France, Germany and Italy left overall production down 5.7 per cent.
Industrialists are hoping that the massive half-point cuts in interest rates in the US last month and by the European Central Bank on Thursday will kick start demand for UK goods. …