This week’s focus will be on three ONS releases: the much-anticipated labour productivity figures for the final quarter of last year, manufacturing output numbers for February 2016 and UK trade statistics for the same month.
Labour productivity for q4 2015
Productivity is the media buzzword of the moment and the UK’s lagging performance is giving the current Government quite the headache. It was also the topic of
EEF’s recent “Productivity: The State of the Manufacturing Nation” report, which looked at productivity from a manufacturing perspective.
Apart from the importance of productivity improvements for our living standards, it’s also a key indicator affecting the future path of central bank interest rates. Productivity largely determines the ability of an economy to grow without generating inflationary pressures, or more simply, how much of the fruit of our labour ends up in our pockets rather than eaten up by rising prices.
A good print will therefore give the Bank of England more confidence to stick to its guns and push a hike further to the future. So far, the data has been encouraging, with labour productivity as measured by output per hour increasing for three consecutive quarters for the first time since 2011.
Index of production
The week will end with a good dose of manufacturing statistics with the ONS publishing the monthly Index of Production for February. The data comes in the midst of some disappointing manufacturing PMI figures for the start of 2016. Last week’s PMI for March left the quarterly average at 51.6, equalling the lowest recorded since it first moved back into expansion territory (>50.0) during early 2013.
The January IoP data showed that manufacturing output grew by 0.7%, its strongest monthly increase since September 2015. Output still saw a marginal drop of 0.1% over the same month a year ago however, and we do not expect a significant bounce back for Q1 2016 as whole, with the sector still weighed down by a host of headwinds in the global economy.
…and UK Trade on Friday
Also in the backdrop of some unfavourable data – with National Accounts last week showing the UK hitting its highest current account deficit on record – the ONS will publish trade data for February 2016. In the three months to January the goods in trade deficit widened by another £1.5bn, and even if the data shows a narrowing deficit in February, it’s unlikely to prove too much more than a blip.
Tuesday: Some key stats on UK manufacturing and the EU by George Nikolaidis
Wednesday: Chris Richards will comment on the EU Commission’s communication on the Digital Single Market
Thursday: Zach Witton will blog on UK labour productivity stats
Friday: Analysis of the IoP figures by Lee Hopley