An employee works on the engine of a bus at a factory in Guildford, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

U.K. Industry Output Jumps Amid Oil Rebound, Record Factory Run

(Bloomberg) -- U.K. industrial production posted its biggest monthly increase in more than a year in January, figures Friday showed.

The 1.3 percent gain from December came as factory output rose for an unprecedented ninth consecutive month and oil production rebounded following the reopening of a key North Sea pipeline.

U.K. Industry Output Jumps Amid Oil Rebound, Record Factory Run

Manufacturers are benefiting from a synchronized global upswing and in January they increased output by 0.1 percent, the data from the Office for National Statistics show. The strongest sectors were transport equipment, machinery, and rubber and plastics products.

Oil and gas production jumped a record 32 percent, more than recovering the losses incurred in December when the Forties Pipeline System was closed for repairs for almost three weeks.

The figures underline a recent improvement in the U.K.’s economic prospects, which is expected to prompt the government’s fiscal watchdog to upgrade its forecasts next week.

However, the increase in manufacturing was less than economists expected, and the ONS noted that only five out of 13 factory sectors showed growth in January.

Weak Link

A weak spot in the economy was construction, where output plunged 3.4 percent -- the most since June 2012 -- on the back of declines in housebuilding and commercial developments.

The sector has lost output in each of the past three quarters -- partly due to Brexit uncertainty -- and in January work was halted at a number of sites following the collapse of contractor Carillion Plc.

New construction orders dropped 25 percent in the fourth quarter after reaching a record high on high-speed rail contracts in the previous three months.

The trade deficit widened to 12.3 billion pounds in January ($17 billion), as rising oil prices pushed up the cost of imported fuel. Exports rose 3.1 percent from December and imports climbed 3.5 percent. Including services, the deficit widened to 3.07 billion pounds.

An upward revision to services exports saw the total deficit in the fourth quarter restated to 7.8 billion pounds from an initially estimated 10.8 billion pounds. It means net trade was less of a drag on economic growth than previously estimated during the period.

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