Data releases are few in number this week, but Friday’s production and trade releases from ONS more or less close the books on 2016.
Manufacturing production data
We know quite a bit about production in December already. The first estimate of 2016q4 GDP at the end of January put manufacturing output growth at 0.7%. A wobbly start to the quarter as output contracted in October was followed by a pharma-driven month on month bounce in manufacturing production of 1.3% in November.
We can therefore deduce that November’s gains weren’t unwound in December, rather output showed a further increase – likely to be somewhere in the region of 1%.
This positive trend at the end of last year across manufacturing stacks up with our own Manufacturing Outlook Survey in the fourth quarter and strengthening PMIs. And any data points we’ve seen thus far in 2017 point to on-going momentum at the start of this year.
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The final quarter of 2016 looks like it was a guddun’ for exports. In the year to the three months to November goods exports to the EU were up nearly 15% and to non-EU markets growth was running at nearly 7%. Manufacturers were also doing pretty well overseas with the value of exports up 11% over this same period.
But before we get carried away and declare the UK in midst of an export bonanza thanks to Sterling tanking, we were sucking in imports at a pretty healthy rate over this period too. Total goods imports were up 13% in the year to the three months to November, which left the trade deficit wider than at the end of the three months to August.
Forecasters – including the Bank of England’s latest forecast – point to a positive contribution to growth from net trade in 2017. Friday’s data should continue to point to a decent showing for exports in the three months to December, but keep an eye on those import numbers too.