LONDON (Reuters) - British industrial output grew more strongly than expected in September as it bounced back from a fall the previous month, providing some reassurance that the country’s economic recovery is not being driven only by consumption.
Output in the industrial sector - which makes up about a sixth of Britain’s economy - climbed 0.9 percent during the month and was pushed up most strongly by manufacturing, the Office for National Statistics said.
Economists had expected a rise of 0.5 percent, according to a Reuters poll of economists.
Sterling jumped to a one-week high against the dollar and British government bond prices fell as investors took the data as another sign that the Bank of England might bring forward its timeframe for raising interest rates.
But economists cautioned against reading too much into Wednesday’s figures and Britain’s economy was still being driven by consumption and the services sector.
Alan Clarke at Scotiabank said the September recovery in industrial output merely reversed August’s drop. “Taking the two together shows there was nearly zero growth in the last two months,” he said. “There can only be better news to come.”
Growth in industrial output over the three months to September slowed to 0.6 percent and meant there was no change to the estimate of Britain’s overall economic growth of 0.8 percent between July and September.
Britain’s economy has staged a surprisingly strong recovery in 2013 after struggling to get over the financial crisis. But it has depended largely on consumer spending which has been buoyed by a recovery in the housing market.
A survey by mortgage lender Halifax published earlier on Wednesday showed British house prices in the three months to October were 6.9 percent higher than a year earlier.
The Bank of England meets on Wednesday and Thursday and is not expected to change policy, having said it will keep interest rates at their record low until unemployment falls to 7 percent.
Economists expect the Bank to bring forward its expectation for when that will happen - currently late 2016 - when it publishes new forecasts next week.
Compared with a year earlier, industrial output in September was 2.2 percent higher, the strongest annual growth since January 2011, helped by a rebound in oil and gas after maintenance work hit output last year.
The narrower category of manufacturing rose by 1.2 percent, compared with forecasts for a 1.1 percent rise.
A survey of purchasing managers last week suggested Britain’s manufacturing sector was enjoying its fastest growth in export orders in more than two years but was still expanding more slowly than the construction and services sectors.
editing by Ron Askew