UK manufacturing jump shows economy ended 2016 strongly despite Brexit vote

LONDON (Reuters) - British manufacturing grew more strongly than expected in December, showing the economy remained resilient to the end of the year despite June's Brexit vote shock.

Official data released on Friday also showed the country's construction sector grew more quickly than many economists had forecast in December while the trade deficit narrowed.

Britain's economy was the strongest of the Group of Seven nations last year, confounding predictions of a sharp slowdown after the decision by voters to leave the European Union. But it is widely expected to slow this year as rising inflation eats into the spending power of consumers.

The main driver of growth has been the country's dominant services sector.

But Friday's figures showed manufacturing grew strongly in the October-to-December period, up 1.2 percent from the previous three months, helped by a 2.1 percent jump in December.

That was much stronger than a forecast for a 0.5 percent rise in December in a Reuters poll.

However, the Office for National Statistics said the increase was due in large part to the often volatile pharmaceuticals sector.

Compared with December 2015, manufacturing was up 4.0 percent, the strongest increase since April 2014.

Industrial output overall rose 1.1 percent in December, stronger than expectations for a 0.2 percent increase in the Reuters poll, taking the year-on-year growth figure to 4.3 percent, the strongest since January 2011.

Britain's smaller construction sector also grew by more than expected, up 1.8 percent in December from November, helped by the building of houses and commercial property. The Reuters poll had predicted an increase of 1.0 percent.

Despite the stronger-than-expected figures for December, the ONS said it was not revising its preliminary estimate that Britain's economy grew by 0.6 percent in the fourth quarter.

Separate figures from the ONS showed Britain's goods trade deficit fell to 10.89 billion pounds in December, narrower than a forecast of 11.5 billion pounds in the Reuters poll.

The ONS said the improvement was largely to due to exports of erratic items such as gold and aircraft parts and there was little evidence that the fall in the value of the pound since the Brexit vote was helping bring down the trade gap.

Excluding the volatile erratic items, Britain's trade deficit widened in December.

(Reporting by William Schomberg and Andy Bruce)

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