UK manufacturing growth surges to 1 1/2-year high

British manufacturing grew in September at the fastest monthly pace since April 2014 and the trade deficit narrowed, according to figures that provided some hope a slowdown in the world’s economy might not drag down Britain’s.

The data were released a day after the Bank of England highlighted risks from abroad as it signalled it was not about to raise interest rates anytime soon.

Manufacturing output rose 0.8 percent in September, compared with a 0.4 percent increase in August, the Office for National Statistics said on Friday. Economists polled by Reuters had expected only a 0.4 percent increase.

British factories have struggled as demand from Europe weakened and the pound strengthened, although one survey this week suggested their fortunes improved notably in October.

Separate ONS data released on Friday showed Britain’s trade in goods deficit narrowed to 9.351 billion pounds in September from 10.786 billion pounds in August, undershooting the Reuters poll consensus for a 10.6 billion pound gap.

The revival in manufacturing, if sustained, could point to faster economic growth in the fourth quarter.

“However, we will need more evidence before judging that a corner has been turned,” said Martin Beck, an economist at EY ITEM Club.

The ONS said trade probably continued to weigh on growth in the third quarter, and despite September’s smaller-than-expected trade gap, economists doubted the country’s external performance would improve much.

“While the trade numbers were a bit better in September, this is only relative to July and August. If we look at Q3 relative to Q2, the picture is decidedly worse,” Liz Martins, an economist at HSBC, said.

Industrial production data for September had a negligible effect on the earlier official estimate for gross domestic product growth in the third quarter, the ONS said.

Industrial output fell 0.2 percent on the month, after rising 0.9 percent in August. On the year, output rose 1.1 percent, down from 1.8 percent growth in August.

(Reporting by Andy Bruce, editing by Larry King)

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