Here’s a Monday morning look ahead at the data and events relating to UK manufacturing.
Index of Production
On Wednesday, the August figure for Index of Production is released by the ONS. The July IoP was disappointing showing that manufacturing contracted by 0.8% on a monthly basis. This indicates a poor start to what we expect to be challenging q3 for UK manufacturing. Last week’s GDP revisions showed that manufacturing slipped into technical recession in the first two quarters of 2015.
The August IoP will be give us a good indication of what to expect from manufacturing output in q3 having collected two thirds of the quarterly data. Given the escalation of headwinds in the global economy since July and the flat UK manufacturing PMI data over the past months, we do not expect any major pick up in manufacturing output in August.
After a buoyant q2 – where the trade in goods deficit narrowed by around £5.0bn – the July figures looked more familiar to regular watchers of UK trade data. During July, about half the gains from q2 were wiped out, with the trade deficit in goods widening by £2.6bn from June 2015. This was mostly down to poor export performance where goods exports fell by £2.3bn – driven by a slump in chemical and manufactured exports – the lowest figure since September 2010.
We expect more of the same from the August release on Friday. The summer has seen a considerable deterioration in conditions for UK exporters with the slowdown in China in particular taking its toll on import demand from emerging markets. Overall, we do not expect the robust trade performance in H1 2015 to be replicated in the second half of the year.
Tue: Lessons from last week’s GDP revisions
Wed: Index of Production
Thu: MPC minutes
Fri: UK Trade