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UK industrial output rebounds but record imports obliterate higher exports

Reuters

LONDON, Jan 11 (Reuters) - British industrial output rebounded in November, helped by a recovery in oil and gas and adding to signs that the economy kept its momentum in late 2016 despite June's shock Brexit vote.

But Britain's trade performance deteriorated, the data also showed. A record increase in imports completely outweighed exports which also hit an all-time high, showing the pound's drop since the referendum has yet to improve Britain's balance of trade.

The Office for National Statistics said industrial output rose 2.1 percent in November alone, recovering from a 1.1 percent drop in October and beating expectations for a 0.8 percent jump in a Reuters poll of economists.

Output in manufacturing rose 1.3 percent following a 1.0 percent contraction in October, compared with a forecast for a 0.5 percent increase in a Reuters poll.

The resilience of Britain's economy since June's decision to leave the European Union has been due almost entirely to the country's services sector.

By contrast, official data has shown that manufacturing has yet to show a clear benefit from the post-referendum fall in the value of sterling and factories are facing a sharp rise in costs of imported goods.

The ONS said production output remained broadly flat over the last few months.

The large increase in industrial output in November largely reflected the reopening of the Buzzard oilfield in the North Sea - responsible for around a tenth of Britain's oil output - and an increase in the volatile pharmaceuticals sector.

The official data has been weaker for manufacturing than private sector business surveys have shown.

One survey last week showed British manufacturing grew at its fastest pace in two and a half years last month, adding to signs that the economy ended 2016 strongly.

Compared with a year ago, industrial output was up 2.0 percent, again much stronger than forecast in the Reuters poll. Manufacturing output grew by 1.2 percent compared with a year ago, recovering from a fall in October.

Separate figures from the ONS showed Britain's goods trade deficit with the rest of the world widened to 12.163 billion pounds in November, bigger than all forecasts in the poll.

While there was a record increase in goods exports to just over 27 billion pounds, imports also hit an all-time of nearly 39.2 billion pounds. Britain's trade deficit with the EU widened to a record 8.586 billion pounds.

Supporters of Britain's exit from the EU have said the size of the deficit strengthens the country's hand in the upcoming Brexit negotiations with the rest of the bloc.

The ONS also released figures for construction output in November, which fell 0.2 percent on the month and rose by 1.5 percent on the year. The Reuters poll had pointed to growth of 0.3 percent on the month and 2.0 percent on the year.

(Reporting by Andy Bruce and William Schomberg)

 

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