Gloomy summary

Here is a summary of four reports posted on the Business and Economics sections of the BBC News website over the last few days. Be warned - none of them are particularly hopeful, the green shoots of summer giving way to autumn mists.

Shock fall in industrial output
Manufacturing output, which excludes energy production, fell 1.9% from July and 11.3% year-on-year
However there may be a seasonal factor to this data. The ONS said there was evidence that factories had been ramping up production in July and then shutting down for holidays in August.
*There was a decrease in oil and gas production of 7.7% due to planned maintenance.
*But there were big rises in production of wood and wood products and transport equipment.
*Industrial production in the three months from June to August fell 0.2% compared with the previous three months and 10.4% compared with the same period last year.
*Motor vehicle production, which had given a boost to manufacturing figures in July, fell 2.6% in August.
The National Institute of Economic and Social Research revised its estimate for GDP, estimating that the economy did not grow in the June-to-September quarter.

Recession in UK ‘still not over’
The British Chambers of Commerce (BCC) said business confidence was improving but the economy was still “frail”. They surveyed more than 5,500 companies and found that confidence strengthened across the board - confidence among manufacturers was at its highest level since the beginning of 2008.
But despite “good progress” being made in both the manufacturing and service sectors, domestic orders and sales were still down on the previous quarter. David Kern, chief economist at the BCC told the BBC that businesses had made “difficult decisions” at the start of the downturn - including job cuts and and stopping investment. “This kept cash in the business and now they are in a position to invest.”
Official GDP figures are due next week. If they show no growth, it will be the first time the UK has endured six successive quarters without growth.
Separately, UK retail sales rose 2.8% from September 2008, the British Retail Consortium (BRC) said. But these figures are compared with a year ago when confidence was severely dented by the turmoil in the financial markets, so that rise is from an abnormally low base.

Pound hit by falling UK inflation
The Consumer Prices Index (CPI) dropped to an annual rate of 1.1% in September from 1.6% in August. RPI, which includes mortgage interest payments and housing costs, fell to -1.4% from -1.3%.
The slide in inflation was greater than had been expected, but was largely attributed to the spike in energy prices seen a year ago, which meant prices in September this year were considerably lower. Electricity, gas and other fuel bills fell by 7.3% on the year, the Office for National Statistics (ONS) said. Rising energy prices mean that inflation is likely to rise again in coming months
The return of VAT to 17.5% from its current temporary 15% level would also push CPI back towards 2% by turn of the year.
However, it is forecast that the “huge amount” of unused production capacity in the economy could eventually push inflation down sharply.
The pound fell 0.5% against the euro to a six-month low of 1.0628 euros.
It also fell to a five-month low against the dollar of $1.571, though pulled back against both currencies later.

Quantitative Easing
A report by the Centre for Economics and Business Research predicted that UK interest rates would remain at their historic low of 0.5% until 2011 and would stay below 2% until 2014.
The inflation data showed that the Bank of England pumping of about £160bn into the the economy’s money supply - so-called quantitative easing - had not yet taken effect, said James Hughes, chief economist at Black Swan Capital Wealth.
But he added that the huge budget deficit, welfare system commitments and “uncompetitive” exchange rate meant the supply of money had not yet fed through to prices.
Meanwhile, UBS economist Amit Kara said the inflation figures would be “a comfort” to the Bank’s rate-setting committee.
“I think it’s minded to expand the quantitative easing programme. This just provides the additional reason to do it.”
The British Chambers of Commerce (BCC) said the manufacturing figures showed that more money needed to be allocated to the quantitative easing programme.
“The weakness in bank lending poses serious obstacles to a sustainable recovery,” said David Kern, chief economist at the BCC.
“We urge the MPC to increase the quantitative easing stimulus to £200bn and to take other measures aimed at increasing bank lending.”

State pensions to rise by 2.5%
The basic state pension will rise by £2.40 per week next April, even though inflation measured by the Retail Prices Index (RPI) was negative last month.
Theoretically, pensions are altered in April in line with the inflation rate the previous September. However since 2001, the government’s pension policy has been to award a minimum of 2.5% if the RPI is lower than that.
Unless a change to the policy is announced in this autumn’s pre-Budget report, other benefits will be unchanged, as they are usually linked to RPI but are not allowed to fall if it is negative.
“The measure of inflation used to uprate state pensions ignores spending by the pensioners who most rely on them, and inflation is still positive if you focus on the things they buy.
“By the time we get to April 2010, falling prices could also be a distant memory,” he warned.
For a single pensioner the weekly pension will go up from £95.25 to £97.65, while that for a pensioner couple will rise from £152.30 to £156.15.