UK manufacturing output declined for a second straight month in September, raising questions about the strength of the recovery in the sector. Output fell 0.2pc in September from the previous month and was down 0.5pc on a year-on-year basis, according to National Statistics. Economists had expected September's manufacturing output to have expanded 0.4pc on the month. The fall was driven by a significant fall in electrical and optical equipment, basic metals and metal products. Sterling declined against the dollar following the report, slipping to USD1.6760 after hitting USD1.6860 earlier this morning.
The output figures contrast with the CIPS manufacturing index earlier this week, which hit a near four-year high of 54.2 in October from 53.2 in September. The Bank of England is expected to raise interest rates tomorrow amid signs that the UK economy is strengthening but the Confederation of British Industry remains cautious about the recovery. "There are tentative signs of a manufacturing recovery but... it is too early to say whether firms have really started to turn the corner," it said in a recent report.//www.fxcentre.com