British manufacturing output fell for the third month in a row in October, official data showed yesterday, strengthening the case for a interest rate cut this week from the Bank of England and sending sterling lower.

Other data showed, however, that business confidence in the London area was growing and that many companies were still having trouble finding the right staff.

The Office for National Statistics said manufacturing output fell 0.4 per cent from the previous month to stand 0.5 per cent down from a year earlier.

The underlying trend also worsened, with the rolling three-month average showing a fall of 0.7 per cent in the August to October period compared with the prior three months - the lowest such figure for nearly four years.

"October's manufacturing output data show us how bad things are for manufacturers and to sum up, they are awful," said Mr Neil Parker, economist at Royal Bank of Scotland.

"The data add to the case that the Bank of England Monetary Policy Committee (MPC) should cut interest rates this week."

Manufacturers, which account for around a fifth of Britain's economy, have been hardest hit by Britain's economic slowdown, with a sharp fall in orders from Asia and the high British pound taking a toll on exports.