A SHARP reversal of fortunes for the UK's manufacturing sector raised more fears over the impact of Europe's flat-lining economy.

The Office for National Statistics (ONS) said output in the sector dropped by 0.7 per cent in October, offsetting progress the previous month.

Economists blamed a combination of weak overseas demand and a strong pound for the decline, which was driven by nine out of the 14 sub-sectors of manufacturing and was particularly noticeable in the electronics sector.

Paul Hollingsworth, UK economist at consultancy Capital Economics, said: "Manufacturers have been compelled to pass on any cost savings to consumers recently, so they are unlikely to be able to rebuild their margins.

"But lower prices should still help to boost demand for their products."

Overall industrial output, which includes mining and quarrying and electricity generation, was weaker than expected at 0.1 per cent lower in the month.

However, total output was still estimated to have increased by 1.1 per cent over the year to October, including a rise of 1.7 per cent in manufacturing.

Markit economist Chris Williamson said the figures served as a reminder that Bank of England policymakers cannot be complacent about the UK's recent run of strong growth.

He added: "With growth largely dependent on the domestic economy, and consumer spending in particular, there is no guarantee that the UK's recent robust economic performance will continue into the new year."