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MNI (London)
Repeats Story Initially Transmitted at 14:30 GMT May 9/10:30 EST May 9
--UK March Short Term Indicators Data Due for Release Thursday
     LONDON (MNI) - Ahead of the UK March Industrial Production (IOP),
Manufacturing, Construction output and Trade data release, we outline five
themes for particular attention.
           Mar       Mar
      Industri  Industri         Mar          Mar         Mar     Mar        Mar
            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
an        +0.1      +3.0        -0.2         +2.9        -2.3    -2.0      -11.1
r         +0.1      +2.2        -0.2         +2.5        -1.2    -1.0      -10.2
     --Surveys, analysts point to flat showing. 
     The March PMIs presented further evidence the UK economy entered a softer
phase of growth, with all three headline indices losing ground on the month. The
manufacturing PMI, though initially showed a marginal gain, was revised down to
54.9 in March, put down largely to a slowdown in new orders. The index went on
to recede further in April, suggesting growth momentum in the sector is slipping
away. The construction PMI, blighted by the bad weather, slipped to a 20-month
low, as did the services survey. Analysts expect the monthly figures to come in
broadly in line with the ONS's own estimates (see point three) while forecast
the trade deficit doubling to 2.0bn.
     Table 1: Purchasing managers' indices
                      February  March  April
UK Manufacturing PMI      55.0   54.9   53.9
UK Construction PMI       51.4   47.0   52.5
UK Services PMI           54.5   51.7   52.8
     Data arrives too late for the MPC. 
     Confirmed by the ONS to MNI, the Bank of England Monetary Policy Committee
did not have early access to the Thursday's data during its round of monetary
policy meetings carried out this Tuesday and Wednesday. It was, however, granted
pre-release access to national accounts data, published Tuesday, which detailed
"small" improvements and revisions made by the ONS in advance of this year's
Blue Book, out June 29. Between Q2 1997 and Q4 2016, average quarter on quarter
real GDP growth was unrevised, while the absolute revision to quarter on quarter
real GDP growth was 0.05 percentage points. Average annual real GDP growth
remained unchanged at 2.0%.
     What we already know. 
     The ONS published preliminary month-on-month March estimates for IOP,
manufacturing and construction in its preliminary Q1 GDP growth estimate on
April 27. Table 1 below outlines these forecasts that, assuming no revisions to
the data, are normally the best guide to the month's full-data figures.
Revisions to construction output, up or down, could also drag GDP growth in the
same direction. The sector fell 3.3% on the quarter in Q1 and was knocked off
0.2pp from overall growth. In addition, the trade numbers, also delivered
Thursday, will feed into the expenditure measure of GDP and tell us how much the
trade sector contributed to Q1 GDP. Analysts expect the sector to still have
exerted a drag on growth in Q1 but less so than in Q4 2017.
     Table 2: ONS March estimates taken from preliminary GDP
                             GDP Weight, per                               March
                                        1000  January  February       (forecast)
UK Industrial Production,
% m/m                                    140     +1.3      +0.1             +0.1
UK Manufacturing, % m/m                  101      0.0      -0.2             -0.1
UK Construction, % m/m                    61     -3.1      -1.2             -2.3
UK Services, % m/m                       793     +0.1      -0.2             +0.1
     Auto Industry Weighing on Manufacturing. 
     Car production was down 13.3% y/y in March, data from the SMMT revealed
with Mike Hawes, SMMT Chief Executive, branding the figures a "considerable
concern". Of the 147,471 cars produced in the UK in March, just 32,796 were
intended for the domestic market, down almost 20% on the year, while the number
of those destined for foreign shores was down 12%. At 14.3%, transport equipment
is the second biggest sub-category within manufacturing output (second
marginally to food, drink and tobacco) and despite the uninspiring data from the
SMM, official data has shown this category continuing to expand at a fairly
solid rate.
     Weather effects. 
     The mean temperature was 3.8 degrees Celsius in March, some 1.6 degrees
below the 1981-2010 long term average, according to the Met Office. The
below-average-outturn will have been skewed by the exceptionally cold weather
endured in the first week of the month, but the way the ONS collects survey
responses -- firms are not at liberty to report figures on a strict calendar
month basis -- means that changes in activity in March may have washed up in the
February data and via versa. In its output measure of GDP, the ONS said that
while the adverse weather was responsible for around half the slump in quarterly
construction output, there was no such impact seen in the manufacturing sector.
--MNI London Bureau; tel: +44 203-586-2225; email:
MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |

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