UK manufacturing output falls unexpectedly in October

[LONDON] British manufacturing output fell unexpectedly in October, according to official data that offered scant hope the sector will help drive economic growth in the last months of the year.

Manufacturing output fell 0.4 per cent on the month in October, against expectations for it to stagnate and compared to a 0.9 per cent increase in September, the Office for National Statistics said on Tuesday.

Britain had the fastest-growing advanced economy in the world last year and is likely to be at the head of the pack again this year. But it has relied heavily on domestically focused services for growth, frustrating hopes for a better-balanced recovery.

Manufacturing has so far failed to contribute positively to economic growth this year, impeded by a slowing global economy. Tuesday's figures do little to counter some surveys that have shown the sector is heading for a steeper downturn.

An industry survey published on Monday pointed to a weaker outlook for British manufacturing next year, with output and new orders falling to levels not seen since 2009.

Manufacturing output was 0.1 per cent lower compared with October 2014, against expectations for a 0.1 per cent rise.

Industrial output increased 0.1 per cent on the month as expected, while on the year it was up 1.7 per cent - beating a Reuters poll forecast for a 1.2 per cent upswing.

The ONS said other manufacturing and repair - notably the repair of aircrafts - was the biggest downward driver on industrial production in October.

Industrial production is still almost 9 per cent below its pre-downturn peak in early 2008. Manufacturing output is around 6.1 per cent below its peak.

Consumer spending has been a key driver of the economy this year, although a survey from the British Retail Consortium published earlier on Tuesday showed retail spending grew at the weakest pace for any November since 2011.

German industrial output also disappointed in October, undershooting forecasts and suggesting weak demand from emerging markets is taking its toll on a key sector of Europe's largest economy.

The data release comes shortly before the Bank of England announces its latest interest rate decision.

The Monetary Policy Committee is expected to leave borrowing costs unchanged at 0.5 per cent but most economists forecast a rate hike in the second quarter of next year.

REUTERS