Manufacturing output in the UK increased in July while house prices too unexpectedly rose for a second month in August on the back of the improved economic outlook.

The UK manufacturing output rose 0.3% in July and was up 4.9% compared to the same month last year, the Office for National Statistics reported today.

Economists had forecast a 0.3% month-on-month rise and a 5% year-on-year increase.

The annual rise was the largest since December 1994.

The broader industrial production measure grew by 0.3% in July and was up 1.9% compared to the same month last year.

British house prices were up 0.2% in August and were up 4.6% compared to the same month last year, mortgage lender Halifax reported today.

Economists had forecast a 0.5% monthly price drop.

The rise followed a 0.7% monthly increase in July.

Gains over the last two months have reversed much of the decline seen in the three preceding months, said Martin Ellis, Halifax economist.

Prices are now near levels seen at the end of last year, while activity has been static since the start of the year, he said.

"House price inflation has cooled since last year when supply shortages helped to push up prices," Ellis said.

The pace of economic growth is unlikely to be sustained and prices will probably remain static this year, he said.

Nationwide Building Society said on Sept. 2 that house prices fell 0.9% in August, the most in six months based on its measure.

Rightmove, the operator of the nation’s biggest property website, said last month that asking prices for British homes fell 1.7% in August.