Industrial output in UK stagnates unexpectedly in October

Industrial output in the UK failed to grow in October, disappointing expectations for a further expansion and raising doubts over the strength of any recovery in the fourth quarter.

The Office for National Statistics said both industrial and manufacturing output were flat on the month. Markets were positioned for an increase of 0.4 per cent on both measures and the pound fell on the figures.

Moreover, September's rise was revised down, meaning that for the third quarter, industrial output contracted by 0.9 per cent rather than the 0.8 per cent most recently estimated.

The ONS said this would have a small negative effect on third quarter GDP, other things being equal.

"These figures are disappointing," said Philip Shaw, chief economist at Investec. "The recovery is likely to be shallower."

Sterling extended its decline against the dollar to $1.6330 from $1.6350 before the data, and the euro rose almost 10 ticks to 90.75 pence.

The last estimate of third quarter GDP showed a 0.3 per cent quarterly decline, although a sharp upgrade to construction output is likely to lead to an upward revision in the final estimate due later this month.

Within manufacturing, there were monthly output rises in four subsectors and falls in the remaining nine. The biggest riser was machinery and equipment which rose by 5.6 per cent on the month. The biggest faller was electrical and optical equipment which fell by 2.7 per cent.

Compared with a year ago, industrial output fell 8.4 per cent in October and the narrower measure of manufacturing fell 7.8 per cent.

Industrial production has now fallen for 18 consecutive months on an annual basis, the longest run of declines in almost two decades.