Factory output continues recovery

Output from Britain's factories continued to recover in August, putting in its fourth expansion in a row, official data showed this morning.

The Office for National Statistics said manufacturing output rose 0.4% in August from July, double what City economists had expected, to stand 1.5% higher than a year ago.

Manufacturing now only accounts for around 15% of the British economy.

The output increase was broad-based, statisticians said, with a significant increase recorded in the electrical and optical equipment industries.

The wider measure of industrial production, which includes North Sea oil and gas output, rose 0.1%, the same as in July, to stand 0.7% higher than the same month last year.

The ONS said an increase in gas output had helped offset a sharp decline in oil production due to scheduled maintenance work on North Sea oil rigs.Economists said the data would make little difference to the Bank of England's deliberations on interest rates at its meeting next month, however.

"Overall, industrial production is likely to boost quarterly GDP growth in Q3 by just 0.1%, broadly similar to the Q2 experience," said John Butler at HSBC.

"UK manufacturers are struggling, albeit a little less than before, as they fail to benefit from stronger domestic demand," he added.

The Bank of England left interest rates on hold yesterday at 4.75% but many in the City expect it to raise them again next month in response to strong.....continued below