UK industrial production unexpectedly dropped in July. On a monthly basis, production fell by 0.2% M/M, while an increase by 0.2% M/M was forecast. The details show that manufacturing activity rose marginally (0.1% M/M) at the start of Q3, but this was more than offset by declines in mining & quarrying (-1.4% M/M), electricity, gas & water supply (-1.1% M/M) and oil & gas (-1.5% M/M). The breakdown of the manufacturing sector shows a mixed picture as production of durables (1.4% M/M) and intermediate goods (0.1% M/M) rose, while investment (-1.1% M/M) and non-durables (-0.1% M/M) production fell. In the second quarter, the UK manufacturing sector contracted already by 0.5% M/M and also the outlook is bleak as the manufacturing ISM suggested a further slowdown in activity in the third quar-ter.