Week ahead 26 June

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After last week’s data lull, we’re back in business this week with manufacturing investment figures for 2017q1:

What’s happening with business investment?

Investment is perhaps the economic variable that has generated the most debate since the UK’s decision to leave the EU. Available data so far indicates somewhat of a stagnation in business investment over the past year and a half. However, it’s hard to gauge whether Brexit uncertainty is behind that or whether it reflects a paring back from strong levels of past investment. Official statistics show that whole economy investment has been flat to negative since 2015q1, with business expenditure in 2017q1 down 1.1% since the same quarter two years ago.

Friday’s manufacturing investment figures should shed some light on the appetite of manufacturers to invest in 2017. Manufacturing investment was particularly weak in 2016, shrinking by 6.5% over the year, the first annual contraction since 2009.  However, we should see a rebound this quarter in line with whole economy investment which saw a 0.8% quarter-on-quarter increase. Manufacturers are likely to be putting some extra capacity in place to respond to the upturn in demand from export markets.

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