Rolls of steel

Picture copyright

The manufacturing sector grew quicker than anticipated on the finish of 2016 because the UK financial system continued to defy worries of a downturn following the Brexit vote.

Output from the sector grew by 2.1% in December, the Office for National Statistics (ONS) said, and was up 1.2% within the October-to-December quarter.

Nevertheless, the ONS warned that December’s determine was boosted by output from the “unstable” prescribed drugs sector.

Separate ONS data confirmed the UK’s commerce deficit narrowed in December.

The deficit in items and providers fell to £three.3bn from £three.6bn in November. The ONS stated this enchancment was primarily as a result of a £1.1bn improve in exports of products to non-EU international locations.

For the October-to-December quarter, the deficit narrowed by £5.6bn to £eight.6bn.

“Whereas each exports and imports grew over 2016, there stays little proof that the weaker pound has had an impact on the commerce steadiness,” stated Kate Davies, senior statistician on the ONS.

The pound has fallen by about 17% in opposition to the US greenback for the reason that Brexit vote in June final yr. The autumn in sterling makes exports from the UK cheaper abroad, however makes imports dearer.

The ONS figures confirmed the broader measure of business output, which incorporates manufacturing, rose by a better-than-expected 1.1% in December, though it was up by simply zero.three% within the remaining quarter of the yr.

The development sector additionally loved a robust December, ONS figures suggest, with output rising by 1.eight%, primarily as a result of a rise within the constructing of homes and business properties.

“A hat-trick of excellent information for the UK financial system – that time to the financial system firing on a number of cylinders on the finish of 2016, and never simply reliant on providers and shopper spending,” stated Howard Archer, chief UK and European economist at IHS World Perception.

Nevertheless, he famous a “main concern” within the information was a pointy rise within the worth of imported items, which have been up 9.1% in December from a yr earlier.

“This reinforces our perception that shopper worth inflation is headed for three% earlier than the top of 2017,” he stated.

Final week, the Financial institution of England increased its growth forecast for this yr to 2%, Nevertheless, it added that it anticipated the weak spot within the pound to push inflation greater and attain 2.7% subsequent yr.