UK building sector build up points to strong 2016

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, although 2017 looks like it will be more difficult.

Official data released yesterday also showed the country’s smaller construction sector grew more quickly in December than many economists had forecast, while the trade deficit narrowed.

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

The Bank of England has signalled it is in no hurry to raise interest rates from their record low.

Sterling rose after yesterday’s data and British government bond futures modestly extended losses.

“The economy has been remarkably strong in the third and fourth quarter but things might become more challenging in the middle of this year,” Commerzbank economist Peter Dixon said.

British Prime Minister Theresa May is due to launch the process of leaving the EU by the end of March, kicking off potentially difficult negotiations with the rest of the bloc that may deter companies from making long-term investments.

Figures from ONS showed Britain’s goods trade deficit fell to £10.89 billion (Dh49 billion) in December.