Here’s a Monday morning look ahead at the data and events relating to UK manufacturing.
All eyes on UK GDP
On Thursday the ONS will publish its first estimate for GDP in Q1 2016. Most analysts expect a slowdown in the economy’s rate of growth to around 0.4% quarter on quarter from 0.6% in Q4 2015. The downgrade in expectations is mainly down to a series of data releases that show a somewhat softening momentum in the UK economy.
Data for industrial production in January and February has come on the weak side. Total production dropped by 0.3% in February, more than wiping out a marginal gain of 0.1% in January. Manufacturing output was the main culprit, shedding 1.1% month on month in February compared to a solid increase of 0.5% in January. This means that it would take a sizeable increase – north of 1.8% in March – for manufacturing output to return to growth in q1 2016.
In addition, retail sales in q1 2016 surprised on the downside, printing a 1.3% month on month decline in March. That took the toll to 0.8% growth quarter on quarter in Q1 2016, a slowdown from 1% growth in the previous quarter. With private consumption the most sizeable chunk of GDP, this could act as a drag on growth for the whole economy.
The Bank of England has also flagged downside risks from uncertainty surrounding the EU referendum announced in February. Potential transmission channels to real economy include postponed investment and private consumption decisions.
All in all, this GDP release is one not to miss.