Week Ahead 7 September 2015

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The main focus this week will be on UK industrial production, foreign trade, and monetary policy.

PMI bodes well for manufacturing production

July’s report on industrial production, including manufacturing, is due Wednesday. The purchasing managers’ index for manufacturing for the same month climbed a little further into positive territory, suggesting the sector’s growth picked up slightly.

Also on Wednesday, the foreign trade report for July should provide guidance as to whether concerns about manufacturers being hammered by a stronger pound and weak euro zone demand have been premature. Net exports unexpectedly contributed to real GDP in the second quarter.

A not-so-super Thursday

The Bank of England’s monetary policy announcement, and the minutes of the policymakers’ meeting, are due Thursday. The BoE is widely expected to keep the main refinancing rate at a record-low 0.5% and the asset purchase target at £375 billion.

Despite growing fears about the impact of China’s economic slowdown on the UK, the BoE remains focused on the outlook for domestic demand-driven inflation pressures: Governor Mark Carney recently said the decision on when to raise interest rates is still likely be at the top of the bank's agenda at the turn of the year.

The BoE’s next “Super Thursday” – when the announcement, minutes and updated quarterly Inflation Report are out simultaneously – will be in November.

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