After last week’s excitement at the Bank raising interest rates for only the second time since the financial crisis, as well as the triad of PMI releases, you would be forgiven for expecting a slightly quieter week this time round…Well alas this is not the case, with Friday seeing the much anticipated q2 GDP data, as well as manufacturing production and trade data for the month of June.
On Friday, under the ONS’s new monthly GDP calendar, we will have full GDP data for the second quarter of the year. Following on from the 0.2% expansion in the three months to May, we expect to see a 0.4% expansion for the second quarter. This is a noticeable pick-up from the 0.1% recorded in the first three months of the year and goes some way to confirm that this poor performance was a weather related blip, and not a reflection of the economic climate. The majority of this growth is set to come from the dominant services sector. The MPC’s decision last week put a lot of emphasis on this, and so they will be watching the release closely.
Along with the GDP data, we will also get manufacturing production data for the month of June. Momentum in the sector has been easing for a while now, with recent data appearing to confirm that the peak in the recent upturn was reached in the second half of 2017. Indeed after the 1.3% monthly contraction in output in April, the sector did not bounce back as strongly as hoped in May (+0.4%), with only a few sectors able to show positive growth in the first half of the year. We expect a positive reading in June, but with last week’s manufacturing PMI also subdued, we do not expect to see manufacturing making massive gains.
Trade data has been a bit up and down in recent months. Total goods exports did see a 2% increase in May however, with the trade deficit in goods also narrowing, and we hope to see a similar result when June’s data is released on Friday. The weaker level of sterling is likely to still be providing a boost for manufacturers. Nevertheless, while calming a little, tensions between the China and the US remain a concern, with any escalation in protectionist trade policy having the potential for serious knock-on effects throughout the world.