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UK October factory output slides, hit by electronics, after strong September

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December 9
5:59 AM 2014

British industrial output unexpectedly fell in October as manufacturing was dragged down by a sharp fall in production of electronic products following a strong September.

Output for industry overall fell 0.1 percent in October having jumped by a revised 0.7 percent in September, the Office for National Statistics said on Tuesday.

Manufacturing output tumbled 0.7 percent - its biggest monthly decline since May - hit by a 4.5 percent fall in computer, electronic and optical products. 

Pharmaceutical and chemical goods also weighed on the factory sector, the ONS said.

An ONS official said there was no sign of significantly different levels of demand for British exports, which economists have said could be hit by the slowdown in the euro zone.

Economists had forecast a 0.2 percent increase in industrial and manufacturing output in October.

On the year, industrial and manufacturing output were up 1.1 and 1.7 percent respectively.

Despite Tuesday's numbers, there are signs that Britain's economy will avoid a sharp slowdown at the end of the year.

A business survey published last week showed British manufacturing held up in November as demand from domestic orders softened the hit to factories from a fall in export orders.

In a reminder of the weakness of demand among in Britain's main trading partners in the euro zone, German industrial orders rose by a less-than-expected 0.2 percent in October, according to data published on Monday.

Figures on Tuesday showed German imports posted their steepest drop in almost two years in October.

Britain looks set to grow more strongly than other big industrialized economies this year but the recovery has been largely reliant on consumer spending so far, raising questions about the long-term sustainability of the upturn.

The Bank of England has signaled it will keep interest rates low well into 2015 as earningss truggle to grow more than inflation which remains weak.

September's strong performance was linked to a jump in output at British car plants and North Sea oil and gas after longer-than-usual shutdowns in August.

In October, oil and gas production rose again but less strongly than in September, rising 2.8 percent, and car output was also up less strongly.

Manufacturing has further to go to catch up on its deep slump after the 2008 financial crisis. Factory output is still 5.5 percent below its peak, while services sector output is already well above its pre-crisis peak.

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