UK Industrial Production Edges Upward

LONDON (AP) -- British industrial production and new car registrations rose in recent months, data showed Thursday, as the Bank of England announced it would increase the size of its monetary stimulus.

With the economy still mired in recession, the central bank said it would spend another 25 billion pounds ($41 billion) to buy assets from banks to expand the money supply. The Bank, which held its key lending rate at an all-time low of 0.5 percent, reiterated its view that recovery would be slow.

In fact, the 1.6 percent monthly rise in industrial production in September wasn't enough to pull the sector to growth in the third quarter, and new construction orders were flat, the Office for National Statistics said.

The statistics agency had reported earlier this month that the U.K. economy shrank by 0.4 percent in the third quarter, keeping it in recession.

"With production still down by more than 10 percent on a year ago, the road to recovery in industry will be a long and bumpy one," said Jonathan Loynes at Capital Economics.

A respected economic think tank, meanwhile, predicted that the U.K. economy shrank by 0.4 percent in the three months through October.

"The buoyancy of industrial production in September is good news, but a rise between May and July petered out with renewed weakness in August," the National Institute for Economic and Social Research said.

Meanwhile, the Society of Motor Manufacturers and Traders said 168,942 vehicles were registered in October, a 32 percent surge, the biggest monthly gain this year.

Private car registrations, boosted by government-backed subsidies to buyers trading in cars more than 10 years old, were up 53 percent from a year ago to 89,532, the Society said.

Paul Everitt, the Society's chief executive, said demand was stimulated by the extension of the 2,000 pounds ($3,300) subsidy offered by the car scrappage plan. Buyers also appeared keen to get their cars before the sales tax rate goes up from 15 percent to 17.5 percent in January, he said.

The Office for National Statistics said that within the industrial sector, manufacturers saw output rise 1.7 percent in September, although activity for the third quarter as a whole was still down 0.1 percent from the second quarter.

Mining and oil production rose 1.7 percent in September but was down 4.7 percent from the second to third quarters.

Construction orders were unchanged in the third quarter, and 5 percent below the year ago level, the agency said.

For the year through September, orders were 22 percent down from the previous 12 months.

The Bank of England's fresh commitment of 25 billion pounds comes after pouring 175 billion pounds into economic stimulus since it launched the quantitative easing, or QE, policy in March.

Still, the U.K. economy has shrunk by nearly 6 percent since January 2008, the Bank noted.

"The U.K. economy is still in the high-dependency unit, but without QE it might have been in intensive care, or worse," said Stephen Boyle, head of Group Economics at the Royal Bank of Scotland.