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UK industry posts better end to 2016 that estimated

London - UK industrial production rose in December as manufacturing jumped, capping a better-than-estimated performance in the fourth quarter.

The 1.1% gain from November exceeded the forecasts of economists in a Bloomberg survey. It means output rose 0.3% in the final three months of 2016, rather than being unchanged as previously estimated, the Office for National Statistics said on Friday.

On a year-on-year basis, production jumped 4.3% in December, the most in six years.

The modest revision to total industrial production in the fourth quarter will add 0.04 percentage point to GDP during the period, the ONS said.

It estimated last month that the economy grew 0.6% in the three months.

Separate figures showed construction rose 0.2% in the quarter, more than 0.1% gain estimated in GDP data last month, and the trade deficit narrowed - suggesting net trade made a rare contribution to growth in the period.

The figures will nonetheless do little to ease concerns that UK economy remains too dependent on services and consumer spending for growth. That trend may prove unsustainable as household incomes come under pressure from accelerating inflation.

The growth in manufacturing in December was also driven by an almost 10% surge in pharmaceuticals, which the statistics office said is "highly erratic."

The UK has proved unexpectedly resilient since the June vote to leave the European Union, and recent surveys suggest the economy maintained a reasonable pace of growth in January.

Costs are the biggest concern for many companies, as the falling pound drives up the price of imported raw materials.

The pound erased its decline against the dollar following the data. It was at $1.2503 as of 10:13 London time, little changed on the day.

Factory gains

Manufacturing jumped 2.1% in December from November, with nine out of 13 subsectors posting increases. In addition to pharmaceuticals, metals saw the strongest gains. Oil and gas output fell 1.1%.

Construction output rose 1.8% in December, driven by house building and private commercial work. With the sector accounting for less than 6% of GDP, the revision to the fourth quarter has a negligible impact on growth.

The goods-trade deficit narrowed to £10.9bn from £11.6bn in November. Exports rose 4.4% and imports climbed 1.4%.

The deficit including services also narrowed, leaving the fourth-quarter shortfall at £8.6bn compared with £14.1bn in the third. The improvement was due to shipments of oil and aircraft to non-European Union countries and export sales of gold.

It suggests net trade contributed to growth for a second straight quarter. Still, while the pound’s decline since the Brexit vote should help export competitiveness, ONS statistician Kate Davies said there’s “little evidence” that it’s had an effect on the trade balance.

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