This week’s data releases will provide a bit more insight into the state of UK manufacturing at the turn of the year with production and trade figures out for January. There are a few international data points that will also be worth watching out for. Here’s our weekly round-up:
We kicked off the week’s manufacturing stats fest with our Manufacturing Outlook report covering the latest trends in manufacturing in the first quarter of the year. 2015 ended on a particularly weak note with response balances across the main output, orders, investment and employment indicators all heading deeper into the red.
The contraction looks to be easing with some recovery in the past three months and more positive growth expectations for the next three months.
We expect official production data to paint a similar picture for January. Manufacturing output posted a fairly hefty decline (-0.7%) in December. There were some clear sectoral factors at play with continuing pressure on output in basic metals and some big falls in textile and paper and printing. However, some growth in transport, food and pharmaceuticals provided something of an offset.
Some of the factors could unwind a little in the January data, but we expect any growth to be modest and concentrated in a few sectors that have been sitting in the fast lane for the past year.
On the trade side there was also a shortage of positive news at the end of last year. Goods exports headed lower in the final three months of 2015 and our Manufacturing Outlook report is showing another negative balance on new export orders in the first few months of 2016. Aside from the potential upside from recent exchange rate movements, we’re not holding out for indications that we’re in for a net positive contribution from trade to GDP at the start of this year.
The international outlook
We know that UK manufacturing isn’t unique in dealing with a range of challenges to growth. This week also sees official manufacturing data for some of the major eurozone economies. France and Germany also saw manufacturing output fall at the end of last year and markets expect some, but not all, of the ground lost in December to be made up in January.
And then there’s China. Trade data for February is out tomorrow (boy they turn these stats out quickly). The trend of the latter part of 2015 was big year-on-year falls in both exports and imports. Markets are expecting more of the same this week.
Coming up on the blog
Full details of our Manufacturing Outlook survey and a round-up of Index of Production stats from ONS. We’ll also be taking a detailed look at some of our recommendations ahead of next week’s Budget – starting with the apprenticeship levy on Tuesday.