MNI: 5 Things To Look For: Dec UK Short Term Indicators Data

--UK December Short Term Indicators Data Due For Release Friday

By Jamie Satchi

     LONDON (MNI) - UK December Industrial Production, Manufacturing,

Construction output and Trade data will be released Friday. The MNI median

expectations, taken from a poll of analysts, are shown in the table below.

     Ahead of the release, we outline five themes for particular attention.

           Dec       Dec

      Industri  Industri         Dec          Dec         Dec     Dec        Dec

            al        al  Manufactur  Manufacturi  Constructi   Trade    Visible

      Producti  Producti         ing           ng          on  Balanc      Trade

            on        on      Output       Output      Output       e    Balance

         % M/M     % Y/Y       % M/M        % Y/Y       % M/M  Stg bn     Stg bn

--------------------------------------------------------------------------------

MNI

Medi

an        -0.9      +0.3        +0.4         +1.2        -0.1    -2.4      -11.5

Prio

r         +0.4      +2.5        +0.4         +3.5        +0.6    -2.8      -12.2

-Don't rule out a 15%-20% m/m drop in mining/quarrying output. 

     According to the ONS' preliminary estimate of first quarter GDP growth,

mining and quarrying fell 3.9% q/q in the final quarter of 2017 the biggest q/q

fall in a year. Assuming this is correct and that there are no revisions to

previous data, we calculate that this would be consistent with a whopping 17.6%

m/m fall in output - driven entirely by the unexpected closure of the Forties

Pipeline System (FPS) in December, responsible for transporting roughly 40% of

UK oil.

-Snow, wind and storms could have hit construction output.

     At 4.1 Degrees Celsius, December was roughly in line with historic levels,

just 0.2 degrees above the 1981-201 average, but according to the Met Office the

month did play host to storm Caroline (Dec 7), periods of frost and snow (Dec

8-16, and just after Christmas) and storm Dylan (Dec 30-31). So, while utilities

output may not have increased on account of households turning up the

thermostat, those in the construction and possibly manufacturing sectors may

have been forced to have put down their tools. A 0.1% m/m fall in December

construction output was pencilled in by the ONS last month.

-Car Production Set To Drag On Manufacturing Output...Again.

     Data from the SMMT showed a massive 11.7% m/m fall in car sales in

December, eclipsing the 4.6% m/m fall a month earlier, to cap off what has been

a truly horrific year for the automotive sector. Expect to see a sizeable drop

in the transport equipment sub-component of the ONS' manufacturing data,

potentially threating to end an eight-month run of growth in the manufacturing

sector - the best run put together in the last two decades.

-Trade likely to exert positive influence on Q4 GDP.

     Having already got a fair idea of how retail sales and IOP, construction

have contributed to Q4 2017 GDP growth, Friday will deliver another piece of the

puzzle in the shape of the trade data. The sector disappointed in Q3, exerting a

neutral effect on GDP growth but this looks set to be reversed in this quarter.

Friday's data will also enable to us to look at how the UK fared on a year-end

basis.

-December Surveys Point to Robust Growth. 

     While the IHS Markit Manufacturing PMI came in a touch below the November's

local high (58.2) at 56.2, it remained firmly in expansion mode and with the CBI

industrial Trends Survey holding firm at +17 - its joint best outturn in 2017 -

these surveys suggest the sector is in decent shape. Much of this is attributed

to solid export demand and Friday's data will provide an update on how UK

exports fared in December. That said, all three PMI's moderated in January,

including the construction edition which at 50.2 now sits just above the

no-change-mark, raising concerns about how well-balanced UK growth is.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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