A 9.7 per cent slump in output of motor vehicles between September and October, along with a 6.7 per cent drop in vehicle bodies, engines and components, led to the steepest across-the-board decline in manufacturing for three and a half years.

Official numbers confirmed the evidence of surveys that manufacturing has now been shrinking for eight months running, the longest stretch of declines since the deep recession of 1980.

A setback of 1.4 per cent during October was calculated after the Office for National Statistics had revised downwards its estimates for every month since April, with the exception of August.

October’s output was 4.9 per cent down on October last year. The latest three months taken together, were two per cent lower than in May/July and 3.5 per cent down year on year.

Over the latest three months the woes of the motor industry are reflected in a 4.6 per cent fall in output of “transport equipment”, ONS said, followed by a 3.4 per cent drop in paper, printing and publishing and one of 2.6 per cent in basic metals and metal products.

Output of medical and orthopaedic equipment recovered slightly in October after a sharp but unexplained drop in September. But that still left an annual decline of 14.7 per cent for the latest three months.

This slide in manufacturing, along with a 7.3 per cent fall in oil and gas output caused by unscheduled maintenance work, left the wider Index of Production down by 1.7 per cent in October and by 1.8 per cent over the three months.

The pound went into a fresh slide amid suggestions that the entire British economy is slowing down even more sharply than previously thought.

Sterling, which has already sunk by 18 per cent this year against the main trading currencies, dipped further against both the dollar and the euro.

“We look for (the gross domestic product) to contract close to one per cent in the fourth quarter of 2008 with a similar outcome in the first quarter of 2009,” said James Knightley, an economist a ING. “Consequently the Bank of England has more work to do, with a growing likelihood that UK rates will eventually get down to zero.”

Ray O’Donoghue, head of UK manufacturing at Barclays, said: “Further decreases across the board were to be expected, with the automotive industry being the worst hit,” he said.

“The proposed temporary closure of some automotive original equipment plants will have a knock-on effect on the supply chain, causing manufacturers’ working capital and stock to rise.

“A weakened sterling is providing some element of relief for exporters to the EU and US dollar-denominated markets. This, along with government measures, should help stabilise both demand and consumer confidence.

“A combination of reduced inflationary pressure, interest rate measures and a fall in input costs, highlighted by the predicted further decrease in oil prices, could go some way to further alleviating pressures felt in the manufacturing sector, which has proven itself to be resilient to economic challenges in the past.”

But Howard Archer, UK and European economist at IHS Global Insight, warned: “While the substantially weaker pound is helping UK manufacturers, this is being more than offset by sharply deteriorating domestic demand in key export markets, notably the eurozone and the US.”