Production and manufacturing post-Brexit
On Wednesday, the ONS will release industrial production and manufacturing data for July. Manufacturing expanded by 1.8% in the three months to June, its highest growth performance in six years, albeit with high month-on-month volatility.
Surveys released shortly after the referendum painted a gloomy picture of the sector post-Brexit, although it was not all black. EEF’s survey conducted in July recorded the largest drop in business confidence in the survey’s two-year history, but manufacturers also reported unchanged trading conditions thus far and some have seen opportunities from the weak exchange rate. Similarly, manufacturing PMI fell sharply to 48.3 in July, but export orders performed relatively well.
So amid ups and downs, it is hard to take a guess about the July manufacturing data. The ONS will have the final say on Wednesday.
A boost to exports from Sterling plunge?
The UK trade report will be out on Friday. Net trade was a drag on GDP growth over the second quarter due to poor export performance, resulting in further widening of the trade deficit for goods in 2016q2. However, this trend is likely to reverse as the Sterling depreciation should provide a boost to exports. Indeed, all surveys released since the referendum stressed manufacturers’ optimism about export orders. We’ll see on Friday to what extent overseas sales expanded.
EEF releasing Manufacturing Outlook today
Our Manufacturing Outlook for 2016q3 will be out today. It will give more insights on manufacturing trends post-brexit, so stay tuned.