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UK Industrial Output Falls On Oil Extraction

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UK industrial production declined in December as the closure of the Forties pipeline dampened oil and gas extraction, while manufacturing continued to expand for the eighth straight month.

Industrial output contracted 1.3 percent month-on-month in December, which was the first fall in nine months, the Office for National Statistics reported Friday.

Economists had forecast output to drop moderately by 0.9 percent after expanding 0.3 percent in November.

Meanwhile, manufacturing output grew 0.3 percent, faster than the 0.2 percent rise seen in November. The rate came in line with expectations and logged the eighth consecutive monthly growth, which was the longest stretch in three decades.

On a yearly basis, industrial production remained flat in December, after expanding 2.6 percent in November. Output was forecast to grow 0.4 percent.

At the same time, growth in manufacturing output eased to 1.4 percent from 3.8 percent. Nonetheless, the rate exceeded the expected 1.2 percent.

In 2017, industrial production grew 2.1 percent with manufacturing providing the largest upward contribution, increasing 2.8 percent, the strongest since 2014.

In a separate communique, the ONS said construction output increased 1.6 percent month-on-month in December, confounding expectations for a decline of 0.1 percent.

Despite experiencing three consecutive quarterly declines, construction output grew by 5.1 percent in 2017 due to strong growth at the end of 2016 and in the first quarter.

Another report from ONS showed that the visible trade deficit widened to GBP 13.57 billion from GBP 12.45 billion in November.

The deficit with EU countries rose to GBP 8.4 billion and that with non-EU countries reached GBP 5.2 billion.

The total trade deficit widened by GBP 1.2 billion to GBP 4.9 billion in December, primarily due to an increase in goods imports including fuels from EU nations.

The deluge of hard data for December provides further evidence that it was the domestic demand and the services sector that drove the pick-up in growth in the fourth quarter, Paul Hollingsworth, an economist at Capital Economics, said.

However, temporary distortions mean that industrial production and net trade are set to re-gain momentum in 2018, the economist added.

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