UK industrial production jumps past forecasts in December

UK industrial production outpaced forecasts by a wide margin at the end of 2016, prompting a very positive reaction from some economists.

Total output jumped by 1.1% month-on-month, with factory output ahead by 2.1% even as Mining & Quarrying saw production fall 1.1% and Electricity and Gas was down by 2.0%.

Water supply output was steady.

To take note of, the reading on the manufacturing sector was flattered by a 8.3% surge in the sector's production following a rise of 10.6% in the month before, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said in a research report sent to clients.

"Pharmaceuticals output is extremely volatile and likely will mean-revert in Q1, severely dampening growth in overall production," Tombs cautioned.

Energy supply output on the other hand was weighed down by unseasonably mild weather in December.

Friday's industrial production figures were published alongside data revealing a narrower total trade deficit for December of -£3.3bn, versus -£3.5bn in November, while activity in the construction sector expanded at a 1.8% clip on the month.

"A hat-trick of good news for the UK economy – that point to the economy firing on several cylinders at the end of 2016, and not just reliant on services and consumer spending. This is encouraging, although major uncertainties persist over the outlook for 2017 and there are hints in January surveys that consumers may be starting to rein in their spending as their purchasing power is squeezed by rising inflation," said Dr. Howard Archer, chief UK+European economist at IHS Markit.