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UK industrial output rises in Sept at fastest pace this year, trade gap improves

Reuters  |  LONDON 

(Reuters) - British industrial output increased in September at the fastest pace this year and the goods trade deficit improved, mostly upbeat official data showed on Friday.

Despite also showing a sharp downturn in construction, the figures as a whole are likely to hearten Bank of England officials who last week voted to raise interest rates for the first time in more than 10 years.

The Office for National Statistics said the data for September did not imply any change to its preliminary estimate that Britain's grew by 0.4 percent in the third quarter, picking up a bit of speed from earlier in 2017 but still slower than growth in the euro zone.

The ONS said industrial and manufacturing output shot up by a monthly 0.7 percent in September, the fastest growth for each sector since December last year and above all forecasts in a poll of economists.

The consensus had pointed to a reading of 0.3 percent for both.

Industrial output, which includes manufacturing, accounts for 14 percent of Britain's overall economic output.

Figures for the much bigger services sector are due to be released on Nov. 23.

For the third quarter as a whole, there was little change to estimates for industrial, manufacturing and construction output that appeared in the ONS' preliminary economic growth estimate.

A private-sector business survey last week showed British manufacturing grew robustly in October but also suffered rising inflation pressure.

Until now, the official readings of manufacturing have tended to show a weaker picture for the sector than the surveys over 2017.

Separately, the ONS said Britain's goods trade deficit with the rest of the world narrowed by much more than expected to 11.253 billion pounds in September from 12.350 billion pounds.

Economists polled by had expected a reading of 12.8 billion pounds.

There was a sharp improvement in the goods trade deficit with non-European Union countries, which narrowed to 2.982 billion pounds - the smallest since May.

This was not enough to prevent a deterioration in Britain's trade performance during the third quarter as a whole, however, which looks likely to be a sizeable drag on economic growth.

Until now, there has been little sign of any big boost to British exports from the sharp fall in the value of the pound after last year's vote to leave the European Union.

The ONS also released figures for construction that were much worse than forecasts.

Output in September plunged 1.6 percent from August and was up only 1.1 percent on the year - weakest annual growth since March 2016. The poll consensus had pointed to only a small month-on-month drop.

(Reporting by Andy Bruce and Alistair Smout)

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, November 10 2017. 16:05 IST