U.K. industrial output falls more than expected in February, signals slowdown in momentum

The Office for National Statistics (ONS) published the UK industrial and manufacturing production data on Friday which surprised markets to the downside. U.K. industrial production output fell short of economists' forecasts for 0.2 percent rise in February and recorded a monthly drop of 0.7 percent compared to a decline of 0.3 percent in the month before.

Total industrial output dropped for the second straight month as unseasonably warm temperatures reduced demand for electricity and gas weighing on manufacturing output. Year on year growth slowed to 2.8 percent, versus the 3.7 percent expected rise from the revised 3.3 percent rate in January.

Manufacturing production slipped 0.1 percent month-on-month, compared to the 1 percent fall in the previous month and missed expectations for a 0.3 percent increase. Compared to last year, manufacturing production in February was up 3.3 percent, having been predicted to rise 3.9 percent after a 2.6 percent gain in January.

As accelerating inflation squeezes consumer spending--for years a key engine of U.K. growth--economists say that production and trade will have to make a bigger contribution to stave off an economic slowdown.