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UK CommentMixed monthly data from the UK

Industrial production down by 1.3% in December, but manufacturing up by 0.3%
UK industrial production fell by 1.3 percent in December, after growing by 0.3 percent in November (revised from 0.4 percent). The consensus expectation for December was -0.9 percent. The monthly fall was the first since March 2017 and the largest fall since September 2012. However, the only downward contribution came from mining and quarrying, which decreased by 19.1%, following the shutdown of the Forties oil pipeline for a large part of December 2017. There were rises in the rest of the three main sectors, with manufacturing up by 0.3 percent, in line with the consensus estimate. Manufacturing output posted its eighth consecutive monthly rise; the last time that happened was between June 1987 and January 1988.
Construction output surprised to the upside
Elsewhere, construction output increased by 1.6 percent in December, up from 0.1 percent (revised from 0.4 percent) in November, beating the consensus expectation of a fall of 0.1 percent. As a result of the stronger-than-expected increase, the ONS has revised up its estimate for Q4 output growth to -0.7 percent, from -1.0 percent previously. However, according to the ONS, revisions to the industrial production numbers and construction output combined imply that the estimate for the headline GDP growth rate has not been impacted to one decimal place.
Weakening sentiment suggests some momentum has been lost going into 2018
Annual growth rates for manufacturing and construction fell further in December. Year-on-year growth was down to 0.2 percent in the construction sector and 1.3 percent in manufacturing. Economic sentiment for both sectors, as measured by the PMI surveys, also continued to weaken in January. Based on past form, sentiment seems to suggest that some momentum has been lost going into 2018 and that output growth could continue to hover around slightly weaker rates in the near term than what was the case last autumn.


Source: Macrobond




Kari Due-Andresen

Chief Economist Norway

Norway and UK

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