U.K. February manufacturing and industrial production output came in better than expected, adding to evidence that the sector might have bottomed and that the pace of contraction might be slower going forward. Manufacturing output fell 0.9% m/m (median -1.3%) after a 3.0% January drop (revised from -2.9%). This was the 12th consecutive monthly fall but the smallest monthly decline since August last year. The y/y rate deteriorated to -13.8%, the worst since January 1981, and versus -12.9% (revised from -12.8%). Similarly, total industrial production fell 1.0% m/m (median -1.2%) after a 2.7% decline in January (revised from -2.6%) and the y/y rate deteriorated to -12.5%, the weakest reading since records began in 1968 and compared to -11.6% in January (revised from -11.4%). Overall, still very dire figures for the manufacturing sector, which is contracting sharply, but combined with recent PMI, data suggest that the sector is now shrinking at a slower pace. Many manufacturers are also likely to have been running down stocks, which will also have added to the sharp declines seen in Q4 of 2008 and in January.