"The strength in manufacturing could be a sign that what has so far been a sugar rush of low interest rates and rising house prices is broadening out to more sustainable sources of growth"
- Rob Wood, an economist at Berenberg Bank
British manufacturing sector continued benefiting from low interest rates and rising prices, posting a bigger-than-expected monthly gain in July, figures from the Office for National Statistics showed Tuesday. Industrial production surged 1.1% from May, after stagnating for three months, and beating analysts' expectations for a 0.7% gain. Factory output rocketed 1.9%, also exceeding wildest forecasts. The main contributors to growth were manufacturers of transport equipment, namely cars, which advanced 5.3% on a monthly basis and a 12.5% surge annually. Despite a strong monthly gain in mining and quarrying, there has been a long term drop in the sector, due to the extraction of oil and gas, which makes up the bulk of the whole sector. The domestic economy is widely expected to continue gaining momentum, with manufacturing, construction and services all strengthening over the recent months.
In a separate report the mortgage unit of Lloyds Banking Group Plc said British house prices jumped for a sixth straight month in July, and will continue rising as an improving economy boosts confidence. Home values soared 0.9% from the preceding month, hitting a median price of 169,624 pounds. On a yearly basis, prices rose 5.7%. Latest figures are adding to evidence that the U.K. housing market is reviving as demand for property picks up.
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