U.K. industrial production unexpectedly declined and goods exports plunged the most in nine years, indicating a loss of economic momentum that may keep the Bank of England on a cautious policy footing. Total production fell 0.4 percent in July, the Office for National Statistics said in London on Wednesday, missing economists’ forecasts for a 0.1 percent increase. Sales of British goods abroad fell 9.2 percent, contributing to the biggest drop in factory output since January. The figures come as BOE Governor Mark Carney leads a meeting of the Monetary Policy Committee before it announces its latest interest-rate decision on Thursday. After disappointing factory and services surveys last week, the latest data may push the MPC into adopting a dovish tone on when to start raising borrowing costs from a record low. “The economy is losing momentum. I don’t think it’s collapsing -- but there are clear signs of stress,� said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. “You see it in today’s numbers, in the external facing parts of the economy that are coming under pressure.� The pound fell after the data were published and was down 0.3 percent at $1.5356 as of 9:48 a.m. London time. Manufacturing dropped 0.8 percent, against a forecast for a 0.2 percent increase. Oil and gas production fell 0.4 percent. Factory output dropped 0.5 percent from a year earlier, while overall production increased 0.8 percent. The drop in output from June was due to summer shutdowns at auto factories beginning earlier than usual, along with a drop in weapons manufacturing. U.S., China The trade report from the ONS also proved disappointing. The goods trade deficit widened to 11.1 billion pounds ($17.1 billion) in July, more than economists forecast and the most in a year, led by a drop in exports of chemicals and manufactured goods. Imports increased 0.8 percent. The deficit with countries outside the EU widened to 3.5 billion pounds, as exports plunged 12.6 percent on the back of falling shipments to the U.S., Switzerland and China. A survey by Markit Economics last week showed manufacturing growth cooled in August as export orders fell. Producers blamed the decline in foreign demand on a strong pound, weakness in the euro area and the slowdown in China. The ONS said Wednesday that the total trade deficit widened to 3.4 billion pounds. The surplus in services increased to 7.7 billion pounds. In the second quarter, the total deficit narrowed more than previously estimated to 3.4 billion pounds. That raises the possibility that net trade contributed more to economic growth in the period than the 1 percentage point reported last month. The ONS cautioned the overall picture could change as it goes through its annual Blue Book revisions.

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