UK industrial output rises in September; trade gap narrows

British industrial output increased in September at the fastest pace this year and the goods trade deficit improved, mostly upbeat official data showed on Friday.

Despite also showing a sharp downturn in construction, the figures as a whole are likely to hearten Bank of England officials who last week voted to raise interest rates for the first time in more than 10 years.

The Office for National Statistics said the data for September did not imply any change to its preliminary estimate that Britain's economy grew by 0.4 per cent in the third quarter, picking up a bit of speed from earlier in 2017 but still slower than growth in the euro zone.

The ONS said industrial and manufacturing output shot up by a monthly 0.7 per cent in September, the fastest growth for each sector since December last year and above all forecasts in a Reuters poll of economists.

The consensus had pointed to a reading of 0.3 per cent for both.

Industrial output, which includes manufacturing, accounts for 14 per cent of Britain's overall economic output.
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Sterling surges to highest in a year on Bank of England rate hike warning

Sterling jumped after the Bank of England warned it could raise interest rates for the first time in a decade in the coming months while the dollar rose after above-forecast inflation data that could allow the Federal Reserve to hike for a third time this year.

Wall Street was set to open lower, index futures showed after the inflation data. Earlier, weak Chinese data had weighed on European and Asian shares and pulled an MSCI measure of world stock prices down from record highs hit on Wednesday.

Britain's blue-chip FTSE 100 share index fell sharply after the BoE warning, which followed a monetary policy meeting, and was last down 0.7 percent at a two-week low.

Policymakers kept rates unchanged at a record low 0.25 percent but warned a hike was likely to be needed in coming months if the economy keeps growing and inflationary pressures continue to build.

Britain's vote last year to leave the European Union has raised doubts about the long-term health of the economy and strong short-term inflationary pressures.

Sterling rose to as high as $1.3358, adding a cent and a half to touch its strongest in more than a year, and to 89.11 pence per euro after the decision.
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UK unemployment rate at 4-decade low, but pay growth still trails inflation

British workers saw their pay and bonus growth fall further behind inflation in the three months to end-May, data showed on Wednesday, but the jobless rate hit a 42-year low.

The reports will complicate the debate among Bank of England (BoE) officials over the need for higher interest rates.

Sterling bounced against the dollar after official figures showed the unemployment rate in the period between March and May fell to its lowest since 1975 at 4.5 per cent, below the average forecast of 4.6 per cent in a Reuters poll of economists.

But lacklustre wage growth showed the challenge facing Prime Minister Theresa May and her minority government, with growing signs that households are feeling the strain of rising prices since last year's Brexit vote.

The Office for National Statistics said pay including bonuses, adjusted for inflation, fell 0.7 per cent in the three months to May compared with a year earlier — the sharpest drop since mid-2014.

In nominal terms, total earnings rose by an annual 1.8 percent, the weakest increase since the three months to November 2014 and compared with 2.1 per cent in the period to April. This was in line with the Reuters poll consensus.

Inflation hit an almost four-year high of 2.9 per cent in May, official data showed last month, a bigger increase than economists had expected.

After BoE Deputy Governor Ben Broadbent signalled his reluctance to raise interest rates in an interview published on Wednesday, the latest figures broadly confirmed policymakers' existing views of the labour market.
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