The main course for this week’s data menu is the Bank of England’s Super Thursday, preceded by an appetiser of Index of Production (IoP) and Trade data.
IoP and Trade
This will be a less exciting data release than usual, with the preliminary GDP figures published at the end of April already giving us a figure for manufacturing growth in Q1 2017. This came in at a solid 0.5%, continuing the strong momentum seen at the end of last year. Data revisions are always a possibility, however, they’re unlikely to change the underlying story of a manufacturing sector in rude health.
At the same time as the IoP, we’ll be getting the UK trade data for March. Manufacturers are in somewhat of an export sweet spot at the moment, with the simultaneous pick-up in demand from key export markets and a more competitive exchange rate helping boost overseas sales. Exports of manufactured goods were up 1.5% in the three months to February and we see no reason why this trend should stall.
Bank of England Super Thursday
In the last interest rate meeting we saw something of a mood change in the Monetary Policy Committee (MPC). While the interest rate decision was left unchanged, the minutes indicate that it would take little more upside news on the UK economy for other members to join Kirsten Forbes in considering a reduction in monetary policy support.
As it happened, the data surprise came to the downside with GDP growth stalling to just 0.3% in q1 2017. This is unlikely to sway the interest rate decision however. The Committee is likely to wait and see whether this slowdown is transitory or likely to persist before pulling the trigger. So the real interest will be on the BoE’s growth and inflation forecast revisions, as well as, the balance of views on the Committee about how transitory or permanent the slowdown in q1 economic growth will be.