UK industrial output collapsed in August, unexpectedly as far as the bourgeoisie was concerned, destroying any remaining thoughts of green shoots of recovery.
Bourgeois economists who had been expecting industrial growth of 0.3 per cent, and to be able to announce that the slump was over, were shell-shocked when they found out that manufacturing output fell by 1.9 per cent in August, and that industrial output fell by a massive 2.5 per cent.
The bourgeois media had been looking forward with some relish to be able to proclaim that the recovery was well under way.
Instead it was looking at a deepening slump, and a pound that was falling against both the dollar and the euro.
The dollar tumbled after Australia became the first country to increase its interest rate to 3.25 per cent.
This, combined with the fact that it is only a matter of time before China, Japan, Russia and other states insist that the world adopts at least another currency, as a reserve currency, particularly as far as the oil trade is concerned, drove the dollar down.
Any serious effort to force through such a demotion and devaluation of the US dollar, and US imperialism, will be taken by the US as a fundamental challenge to its position, as the major imperialist capitalist power, and as a declaration of future hostilities.
The slump, the trade war, and the world crisis of capitalism were, in fact, sharpening yesterday.
The dollar slid 0.5 per cent to $1.4725 per euro from $1.4648. It reached $1.4749, the weakest since September 24. The dollar fell 0.5 per cent to 89.09 yen, from 89.53. The euro was little changed at 131.20 yen.
The pound declined as much as 0.9 per cent to 92.74 pence against the euro, the weakest level since September 28, after the manufacturing figures were produced, and the index of manufacturing slid to 87.8, the weakest reading since 1992 according to the Office for National Statistics.
The biggest industrial fall, of 7.3 per cent, came from the oil and gas extraction industries, the largest monthly fall in this sector for a year.
The paper, printing and publishing industries, and the electrical and optical equipment industries, both shrank by 2.4 per cent. Food drink and tobacco production dipped 1.7 per cent.
Not a single sector showed growth, with falls in all 13 categories of manufacturing.
Howard Archer, chief UK economist at IHS Global Insight, read the last rites for the recovery. He said: ‘Hopes that industrial production would provide a significant boost to GDP growth in the third quarter have been quashed. If a significant bounce back in production fails to materialise over September and October, concern will mount substantially over the state of the manufacturing sector and its prospects.’
The sharp drop in industrial production will reinforce the Bank of England’s concern over the strength and sustainability of any recovery and increase the amount of paper money being printed in the quantitative easing operation. This will drive the pound down further, and faster.
The FTSE 100 index, meanwhile, contradictorily, returned to over 5000 points. This was thanks to the mining companies. With gold at over £1,040 dollars an ounce, and copper at $6,000 a tonne, all the metals were on the rise.
The top five risers were all mining stocks, with Kazkhhmys up 6.9 per cent, followed by Randgold (5.3 per cent), Antofagasta (3.5 per cent), Vedanta (4.5 per cent), and Anglo American (4.4 per cent).
In fact the destruction of the productive forces by the crisis of capitalism has only just begun.
The only way that the productive forces can be freed from the anarchy of capitalist production is through the victory of the world socialist revolution. This will consign capitalism to the museums and lay the basis for a socialist society by planning production to satisfy people’s needs.