* UK house prices surge 10.2 percent on the year - Halifax
* Industrial output grows less than expected in June
* Car industry reports strong sales growth in July
* GRAPHIC: Halifax UK house prices r.reuters.com/faf35v
By Andy Bruce and David Milliken
LONDON, Aug 6 Consumers continued to power
Britain's economy last month as house prices surged and car
sales boomed, although weak industrial output in June was a
reminder that a balanced recovery still looks a way off.
House prices recorded their biggest annual rise last month
since the start of the financial crisis, figures from mortgage
lender Halifax showed on Wednesday, casting doubt on other signs
that the housing market may be slowing.
But lower-than-expected industrial output in June will also
be noted by Bank of England policymakers - who meet this week -
as they look for signs that the recovery is broadening.
Sterling fell after the output data, which caused some
investors to pare back bets on an early interest rate hike.
"If these trends continue, it could well be left to the
services sector to do much of the heavy lifting in driving
recovery momentum through the remainder of the year," said
Philip Shaw, economist at Investec.
Shaw said business surveys showing strong growth in the
services sector - which accounts for the bulk of Britain's
private-sector economy - should ease any doubts about the
recovery for now.
Britain's car industry on Wednesday bumped up its prediction
for the number of cars sold this year to 2.45 million cars -
some 8.1 percent more than in 2013.
Some signs have appeared that the economic recovery is
spreading beyond housing and other consumer-oriented sectors.
Among those was the biggest rise in business investment in two
years during the first quarter.
The BoE has said it wants to be sure that growth is firmly
established before it raises interest rates from their
record-low 0.5 percent, something most economists think will
happen late this year or early in 2015.
BoE Governor Mark Carney has said the housing market is the
biggest domestic risk to Britain's financial stability, and the
latest Halifax survey contrasted with other signs of cooling in
House prices in the three months to July were 10.2 percent
higher than the same period a year ago, Halifax said. That was
the largest annual increase since September 2007 - the same
month that there was a run on British lender Northern Rock.
"The housing market is shaking off new mortgage rules," said
Rob Wood, UK economist at Berenberg, referring to tougher credit
checks on new borrowers introduced in April. "This is important,
as the BoE has recently been pointing to the housing market as a
good reason for broader economic growth to slow."
But data showing that industrial output grew just 0.3
percent in June may bolster BoE expectations that the economy's
rapid growth will slow a little in the coming months.
Economists had expected a 0.6 percent rise in
output, which would have offset a decline the same size in May.
The BoE will issue its latest quarterly economic outlook
German industrial data also disappointed on Wednesday, as
orders slid in June at the fast rate since September 2011.
With the onus still on consumers to provide the impetus for
economic growth, data from the Society of Motor Manufacturers
showed Britons were still willing to splash out on new cars.
New-car registrations in July increased by 6.6 percent from
a year earlier to 172,907 units - slower growth than for the
first half of the year as a whole, but stronger than June's 6.2
(Writing by Andy Bruce, additional reporting by Costas Pitas
and William Schomberg; Editing by Larry King)