UK industrial output stagnates unexpectedly in Oct

British industrial output failed to grow in October, disappointing expectations for a further expansion and raising doubts over the strength of any recovery in the fourth quarter.

The Office for National Statistics said both industrial and manufacturing output were flat on the month. Markets were positioned for an increase of 0.4 percent on both measures and the pound fell on the figures.

Moreover, September's rise was revised down, meaning for the third quarter industrial output contracted by 0.9 percent rather than the 0.8 percent most recently estimated.

The ONS said this would have a small negative effect on third quarter GDP, other things being equal.

"These figures are disappointing," said Philip Shaw, chief economist at Investec. "The recovery is likely to be shallower."

Sterling extended its decline against the dollar to $1.6330 <GBP=> from $1.6350 before the data, and the euro rose almost 10 ticks to 90.75 pence <EURGBP=>.

The last estimate of third quarter GDP showed a 0.3 percent quarterly decline, although a sharp upgrade to construction output is likely to lead to an upward revision in the final estimate due later this month.

Within manufacturing there were monthly output rises in four subsectors and falls in the remaining nine. The biggest riser was machinery and equipment which rose by 5.6 percent on the month. The biggest faller was electrical and optical equipment which fell by 2.7 percent.

Compared with a year ago, industrial output fell 8.4 percent in October and the narrower measure of manufacturing fell 7.8 percent.

Industrial production has now fallen for 18 consecutive months on an annual basis, the longest run of declines in almost two decades.