* Britain's industrial output falls 1.7 pct on month in Sept
* UK pulled out of recession in third quarter; worries
* Bank of England will decide on further stimulus on
By Peter Griffiths and Olesya Dmitracova
LONDON, Nov 6 British industrial output fell
more sharply than expected in September, data showed on Tuesday,
reinforcing fears an incipient recovery will struggle to gather
Excluding a decline in June, due partly to an extra public
holiday, the 1.7 percent monthly fall was the biggest since
August 2009 and much bigger than the 0.6 percent decline
analysts had forecast.
The data further complicates the economic picture for
policymakers. Economists have been paring back expectations of
more monetary stimulus in November since a surprise 1 percent
rise in British output between July and September.
Many economists pointed out that the main driver of the
industrial data weakness was a slump in oil and gas production,
which was due to maintenance work on North Sea platforms.
However, manufacturing output rose by a smaller than
expected 0.1 percent in September on the month after a
downwardly revised drop of 1.2 percent in August, the Office for
National Statistics said.
The figures supported British government bonds, helping them
outperform their German counterparts.
The downbeat data come two days before the Bank of England
(BoE) must decide whether to inject further cash into the
economy to prop up the recovery.
The central bank has already bought government bonds worth
375 billion pounds ($599 billion) in its quantitative easing
(QE) programme and several central bankers have made cautious
"I think we can expect a downward revision of the (third
quarter) GDP figure... More worrying is the effect this might
have on fourth-quarter gross domestic product," said Brian
Hilliard, economist at Societe Generale.
"As for the coming BoE decision, I think this will have very
little effect. We've had a very strong suggestion from (Bank of
England governor) Mervyn King that it might be time to sit back
and just analyse what's going on rather than continue with QE."
Britain's return to growth is at threat from public spending
cuts, tax rises and low wage growth that have sapped consumer
confidence, while the euro zone debt crisis has cast a dark
cloud over the business outlook.
Business surveys have indicated a weak start to the final
quarter of the year and economists have pointed out that one-off
factors contributed to Britain's third quarter growth.
A survey showed on Monday that business in the dominant
services sector expanded at the slowest pace in almost two years
in October and optimism about the outlook dimmed.
Other news on the economy on Tuesday painted a mixed
picture. British retail sales slowed sharply in October and
house prices fell at a faster rate.
However, new car sales rose strongly and the car business
lobby SMMT raised its forecast for sales this year.
Industrial production was 0.9 percent higher in the three
months that ended in September compared to the previous
three-month period. It was unchanged in the three months to
Mining and quarrying recorded the biggest monthly drop since
February 1974, while oil and gas extraction posted the largest
fall since records began in 1997.