LONDON, England (PNN) - March 1, 2013 - Indications are that Britain continues to bemired in a Depression with figures showing that manufacturing shrank unexpectedly last month and mortgage approvals for home buyers dropped in January.

Gross domestic product fell at the end of last year, and the latest data suggest the central bank may need to do yet more to revive the economy.

The British pound sank to its lowest level against the dollar in more than 2 ½ years, while prices of British government bonds - which the Bank of England could resume buying - rose after the releases.

The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) fell to 47.9 from a downwardly revised 50.5 in January, confounding forecasts for a rise to 51.0. It was the first reading below the 50 line that separates growth from contraction since November.

A separate release showed that mortgage approvals fell unexpectedly despite the authorities' efforts to boost lending.

The numbers are the latest in a string of bad news for the Conservative-led coalition government and Finance Minister George Osborne. Moody’s downgraded Britain's triple-A rating last week, prompted by weak economic growth prospects.

In the last quarter of 2012, a plunge in factory output - which accounts for around a tenth of the economy - shaved 0.1% off economic growth, according to official data released earlier this week. Factory output fell last month at the fastest pace since October.

The subindex for new orders fell to 46.6 in February, the lowest reading since July, as market conditions remained tough at home and abroad, especially in Europe. Backlogs of work also shrank.

The housing sector also revealed signs of weakness.

Mortgage approvals fell to 54,719 in January from 55,632 in December, short of analysts' forecasts for a rise to 56,500.

A rise in the flow of credit in recent months, particularly in home loans, fed hopes that the Bank of England’s flagship Funding for Lending Scheme is helping home buyers, though lending to companies remains sluggish.

Mortgage lending grew by 147 million British pounds, the smallest increase since August, also less than forecast.