U.K. industrial production declined unexpectedly in August and at the fastest pace since September 2012, driven by downward contributions from all main sectors, especially the dominant manufacturing activity, official data showed.
In the same month, the visible trade gap narrowed from July, but the shortfall for the three months to August increased, raising concerns about the third quarter growth.
Industrial production declined unexpectedly by 1.1 percent in August from July, the sharpest fall in 11 months, following a modest 0.1 percent rise in July, data from the Office for National Statistics showed Wednesday.
There was a 1.2 percent fall in manufacturing output after two consecutive increases of 0.2 percent and 2 percent in July and June, respectively. Economists had forecast industrial and manufacturing output to grow 0.4 percent each in August.
The latest data put a dent into hopes that the British economy may have grown by as much as 1 percent quarter-on-quarter in the third quarter, IHS Global Insight's Chief UK economist Howard Archer said.
The British Chambers of Commerce yesterday said economic growth will be around 0.9 percent to 1 percent in the third quarter and signaled hopes of upward revisions to the whole-year forecast.
The International Monetary Fund on Tuesday upgraded the outlook for the U.K. growth to 1.4 percent this year from 0.9 percent. In 2014, growth is seen accelerating to 1.9 percent.
Samuel Tombs at Capital Economics also pointed out that today's figure dampen hopes that the recovery picked up much more pace in the third quarter as well as undermines hopes that the economy is finally rebalancing.
On a yearly basis, industrial production decreased 1.5 percent in August, more than double the expected 0.7 percent drop and also bigger than July's 1.1 percent decrease.
This annual decline reflects falls of 0.2 percent in manufacturing, the largest component of production, and 10.1 percent in mining and quarrying and 3.5 percent in the electricity, gas, steam and air conditioning sector, the ONS said.
In a separate report, the ONS said the visible trade deficit narrowed in August to GBP 9.6 billion from GBP 9.9 billion as exports of goods increased from July, while imports registered a marginal decline.
Exports of goods increased by 1.1 percent on the month to GBP 25.1 billion. On the other hand, imports slid 0.1 percent to GBP 34.7 billion.
The visible trade gap was partly offset by an estimated surplus of GBP 6.3 billion on services. As a result, the overall trade balance showed a shortfall of GBP 3.3 billion compared to GBP 3.4 billion deficit in July.
However, the trade deficit during the three months to August increased by GBP 1.4 billion to GBP 27.7 billion, casting doubt over the contribution of net trade to growth in the third quarter.
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