U.K. industrial production falls in September, outlook remains grin in near term

Industrial production in the United Kingdom fell during the month of September, beating market expectations. However, the outlook remained grin for the near-term period, undermined by weakness in the mining sector.

UK industrial production declined 0.4 percent in September compared with expectations of a 0.1 percent monthly increase. There was a three-month decline of 0.5 percent with a small annual gain of 0.3 percent, data released by National Statistics showed Tuesday.

This was mainly due to a fall in oil and gas extraction from the North Sea maintenance work, plus a drop in mining and quarrying activity. On a yearly basis, industrial production was up 0.3 percent, short of the 0.8 percent expected and down from the previous month's 0.7 percent.

Manufacturing production increased 0.6 percent for the month with a 0.2 percent advance on the year, which was marginally above market expectations, but the sector is struggling to make any headway. For the third quarter, production declined 0.5 percent, which was a fractionally larger decline than reported in the preliminary third-quarter GDP data, although the difference is too small to have an impact on the overall GDP data.

By the end of the third quarter, overall industrial production remained 7.9 percent below the level seen in the first quarter of 2008, while manufacturing production was 5.5 percent below the peak, data showed.

Meanwhile, there was little market reaction post the release of the data as markets remain keen to watch the U.S. election outcome. Sterling remained slightly stronger on the day despite the production miss.