This week, the data releases are heavily weighted towards the back end, with both trade and production figures out on Friday. Before that however, we publish our quarterly Manufacturing Outlook report for 2017q3. Keep your eyes peeled tomorrow for its release, and Lee’s blog on the key results!
Index of Production
Last month, we got manufacturing production figures for the second quarter of the year. These were a fairly disappointing set of figures, with manufacturing output contracting by a substantial 0.6%. That said, this contraction was almost entirely due to weak performance in the motor vehicles sector, which fell by 5.8%. Therefore while the headline figure was disappointing, the downturn was not widespread across sectors. As a result, and given the string of positive data points we have seen since, including last week’s PMI data, as well as what we are hearing from our own members, we expect manufacturing output to rebound this month, and have a stronger end to the year as a whole.
So far, despite the favourable export conditions – notably strong global demand and the weak level of sterling – net trade has not made the positive contribution to growth many were expecting. This is down, in no small part to the UK’s high tendency to import goods. Therefore while exports have been on an upward trajectory since last June, imports have been increasing just as fast, and in fact the balance of trade in goods actually widened in 2017q2. This month we expect manufactured exports to pick-up, after last month’s slight dip, but we don’t expect net trade to make any substantive impacts on GDP growth until 2018.