FEARS of a double-dip recession have been fuelled as official figures revealed the first three-month decline in manufacturing output in two years.

Manufacturing fell 0.7% in the three months to October against the previous quarter, while output fell 0.7% month-on-month, said the Office for National Statistics. The decline was driven by falls in the figures for the metals, repair and pharmaceutical industries.

Economists said the figures added to mounting evidence that the economy will contract in the fourth quarter of the year.

Industry surveys have suggested that the manufacturing sector’s performance has worsened recently, fuelling fears that the UK could slide back into recession, and David Ost, North West director at manufacturers’ organisation EEF, said: “These figures do not bode well for manufacturing growth in the rest of this quarter.”

Rikki Griffiths, corporate director, Barclays Corporate in Merseyside, added: “Since the summer, our conversations with manufacturers have become increasingly gloomy, as new orders have slowed markedly and many companies struggle with less favourable payment terms and pricing pressures imposed by the larger organisations they supply.

“In this climate, UK manufacturers are returning to a business strategy that has become very familiar over the past three years; keeping an incredibly tight rein on cost and working capital and only investing where essential.

“It is not a recipe for growth, but certainly a recipe for staying the course through a difficult period.”