U.K. Factory Output Drops in Worst Streak Since 1980

UK factory production dropped, extending the worst streak since the early years of Margaret Thatcher's administration, and services contracted the most since 1996 as the economy approached a recession. Production fell 0.8% in Sept. from August, the biggest drop in 19 months, the Office for National Statistics said in London. Output last fell for seven straight months in the recession of 1980. The Chartered Institute of Purchasing and Supply's index of services dropped to 42.4, the lowest in its 12-year history, from 46 in Sept. Britain's headed for its 1st recession since 1991 as the global financial crisis spreads from banks to the rest of the economy. Bank of England policy makers will lower benchmark interest rate by at least half a percentage point to 4.5% after the decision, economists say. An economist at Deutsche Bank AG in London said the recent data were terrible. This raises the risk the Bank of England moves by more than the 50 basis points they expect, he said. The U.K. currency has declined more than 20% against the dollar this year. A CIPS sub-index for employment in services fell to the lowest since the survey began. A gauge of expectations declined to 50.8, also a record low, from 58.2 in Sept. Markit bases its finding on a survey of about 700 companies. Adecco SA, the world's largest supplier of temp workers, recently pointed to the U.K. slump as it reported a 27% drop in 3rd-Q profit.