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Last Updated: Monday, 6 November 2006, 10:18 GMT
Weak data spark UK growth fears
Mini production line
Manufacturing output was its weakest in five months
UK manufacturing growth weakened in September, sparking fears that official growth forecasts could be cut.

Factory output growth slowed for the first time in five months, rising 0.6% as against 0.7% in August, Office for National Statistics (ONS) data showed.

The wider measure of industrial production rose 0.2% on the month, and 0.1% in the three months to September.

But despite the figures being weaker than expected, experts still predict UK interest rates will rise on Thursday.

"Overall, this report shows a mildly disappointing outcome that will help to calm some market worries over the potential for a 50 basis point interest rate hike on Thursday, rather than the 25 basis points most expect," said ING economist James Knightley.

However, other analysts did add that recent weak economic data had raised questions about the possibility of a sustained rising trend in interest rates.

"It doesn't change how the Bank of England sees the world and we still expect the BoE to raise rates on Thursday," said David Page of Investec.

"But it certainly raises questions further ahead as to how high rates need to go, with growth failing to reach trend levels, let alone exceed them."

As a result of the weak overall output figures, the ONS warned estimates that economic growth would increase by 0.7% in the third quarter could be cut by 0.04%.


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