Economic 'hat-trick' sees strong end to 2016 for UK
Manufacturing and construction sectors posted strong growth for December while the quarterly trade deficit narrowed, says the ONS.
Friday 10 February 2017 12:57, UK
Manufacturing and construction industries have seen their strongest growth since before the Brexit vote, according to new figures.
Office for National Statistics (ONS) data for December also shows a narrowing of the trade deficit for the last quarter of 2016.
The figures have been heralded as a "hat-trick of good news" that shows the UK economy is not just reliant on consumer spending, adding to evidence that Britain has responded robustly to the surprise outcome of the referendum - though not enough to upgrade overall quarterly growth figures.
It could add to simmering pressure on Bank of England rate-setters to increase interest rates from their historic low of 0.25%, according to one expert.
Figures show the manufacturing sector grew by 2.1% in December compared to the previous month, in large part due to the volatile pharmaceuticals sector, while the construction sector grew by 1.8%, helped by the strongest improvement in house building since February.
For 2016 as a whole, the manufacturing sector grew by 0.7%, after shrinking the year before.
However it was a slow year for Britain's builders, with overall expansion of 1.5% - the weakest since 2013.
Meanwhile, following a large widening in the third quarter, Britain's trade deficit narrowed by £5.6bn to £8.6bn - welcomed as "encouraging" by international trade secretary Liam Fox - though this was largely due to erratic items including oil, gold and aircraft.
The ONS said there was little evidence that - which makes UK goods cheaper for overseas buyers - had improved the trade balance.
Howard Archer, chief UK and European economist at IHS Global Insight, said it was "a hat-trick of good news for the UK economy", with the figures pointing "to the economy firing on several cylinders at the end of 2016, and not just reliant on services and consumer spending".
Alan Clarke, head of European fixed income strategy, said if updated figures from the services sector were also better, fourth quarter GDP growth would be revised up by a 0.1 percentage point.
He said it provided more ammunition for "hawks" at the Bank of England who think that it will soon be time to raise interest rates if the economy continues to do well.
The - the strongest rate in the G7 group of advanced economies - confounding predictions of a sharp slowdown after the Brexit vote.