December brings ‘robust’ growth in two key industries

Manufacturing output grew more quickly than economists had predicted
Manufacturing output grew more quickly than economists had predicted

Britain’s economy has continued to defy expectations of a Brexit-induced slump after the manufacturing and construction industries capped off 2016 with robust growth.

Figures from the Office for National Statistics (ONS) showed construction output beat expectations to rise by 1.8% in December, up from a revised 0.4% in November.

Manufacturing output also grew more quickly than economists had predicted by lifting 2.1% in December, while official data revealed Britain’s trade gap narrowed in the final month of last year.

The goods and services deficit - the gap between exports and imports - shrunk by £300 million to £3.3 billion in December after the export of goods to non-EU countries rose by £1.1bn.

Kate Davies, ONS senior statistician, said a pick-up in the exports of oil and aircraft had helped the trade gap decrease by £5.6bn to £8.6bn between Q3 and Q4, 2016.

However, she said there was “little evidence” to suggest the collapse in the value of sterling since the Brexit vote had made an impact on the trade balance.

She added: “Industrial output and the construction sector both remained broadly flat over the final quarter of 2016 but grew in December, with manufacturing growth driven by a strong month for often volatile pharmaceuticals and the expansion in construction led by house and commercial building.”

The manufacturing industry’s strong performance drove a rise in industrial production output, which grew by 1.1% in December despite economists’ pencilling in a more modest 0.1% expansion.

It means total production output rose by 1.2% in 2016 compared with the year before, with manufacturing growing by 0.7% over the period.

Sterling’s growth slipped back in response to the slew of economic data to trade marginally up against the US dollar at 1.249 and climb 0.1% versus the euro at 1.174.