European Stocks Struggle for Direction as French Output Rebounds, UK Production Gains

European Stocks Struggle for Direction as French Output Rebounds, UK Production Gains

United Kingdom industrial output grew at its fastest rate seen this year in September according to the Office for National Statistics, in data which is likely to make the Bank of England feel more comfortable about its decision to raise interest rates for the first time in a decade last week.

United Kingdom industrial production grew at the fastest pace thus far this year in September and exceeded economists' expectations to end the third quarter on a strong note. The index edged higher by 3.8 per cent when compared to the level achieved in September 2016 on a year-on-year (YoY) basis. The growth was the fastest since February, when production increased 2.9%.

This came on the back of August figures that was revised up to 0.8% growth.

Some important items showing high positive growth during the current month over the same month in previous year include "separators including decanter centrifuge" (117.4%), "bodies of trucks, lorries and trailers" (94.5%), and steroids and hormonal preparations (including anti-fungal preparations).

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The ONS also released the United Kingdom foreign trade data for September, which showed that overall trade deficit narrowed more-than-expected.

The pound was marginally up against the dollar, 0.1% higher at $1.3167, following the positive output figures.

In terms of industries, eleven out of the twenty three industry groups (as per 2-digit NIC-2008) in the manufacturing sector have shown positive growth during the month of September 2017 as compared to the corresponding month of the previous year.

Samuel Tombs, an economist with Pantheon Macroeconomics, said the narrowing of the deficit in September nearly entirely reflected an improvement in trade in erratic items. Economists polled by Reuters had expected 12.8 billion.

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Another report from the statistical office showed that manufacturing new orders rose 8.8 percent yearly in September, reversing a 5.2 percent decrease in the preceding month. Economists had forecast a 0.9% fall.

Both the monthly decline and the annual increase were the weakest figures since March previous year.

The figures reportedly suggest that manufacturing may help to counteract a consumer-led slowdown in the economy. "So we remain optimistic that net trade will provide more support to growth in the quarters ahead".

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