The U.K. manufacturing sector continues to show sharp declines, with January manufacturing output falling far more that expected, down 2.9% m/m (median -1.3%), pushing the y/y rate down to -12.8% (median -11.6%) from -9.9% in December (revised from -10.2%). Similarly, total industrial production fell 2.6% m/m and 11.4% y/y (medians -1.1% and -9.9% resp) versus -1.5% m/m and -9.3% y/y in December (revised from -1.7% and -9.4% resp). Overall, data continue to highlight the very dire state of the U.K. industrial sector. Though PMI data for the larger service sector suggest that the pace of contraction has halted, manufacturing is still deteriorating rapidly, raising the risk for another severe headline GDP contraction for Q1 of 2009.