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UK industrial output flat in July, trade deficit widens sharply

Employees work on cars on the Nissan production line at the company's factory in Washington, northern England in this March 20, 2009 file ph
Employees work on cars on the Nissan production line at the company's factory in Washington, northern England in this March 20, 2009 file ph

LONDON (Reuters) - British industrial output was flat in July and there was a marked deterioration in the trade balance, official data showed on Friday, taking some of the shine off recent strong economic data.

Output in the industrial sector - which makes up about one sixth of Britain's economy - had been expected to edge up by 0.1 percent according to a Reuters poll.

The narrower category of manufacturing rose by 0.2 percent, just short of forecasts for a 0.3 percent rise, although June's figure was revised up, the Office for National Statistics said.

Signs of a surprisingly strong recovery in Britain's economy have come thick and fast in the past few months. Growth of 0.7 percent in the second quarter could be trumped by an even stronger reading in the third.

The Bank of England pledged last month to keep interest rates on hold until unemployment falls to 7 percent, something it does not envisage happening for another three years, but the strength of recent data has encouraged traders to bet rates might rise as soon as next year.

Separate figures showed Britain's goods trade deficit widened to 9.85 billion pounds in July after narrowing sharply in June. Economists had forecast a gap of 8.153 billion pounds.

Including services, in which Britain traditionally runs a surplus, the trade deficit widened to 3.085 billion pounds. That was more than double its level in June and the worst reading since October 2012.

Exports to non-European Union countries plunged by nearly 16 percent, the biggest monthly fall since January 2009.

Monthly trade figures are volatile but July's figures may dampen hopes that Britain's economic recovery is broadening and moving onto a more sustainable footing.

(Reporting by Christina Fincher and William Schomberg)

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