**MNI 5 Things: UK Trade Drag Revised Lower, Construction Down

By Laurie Laird and Jamie Satchithanantham

     **LONDON (MNI) - The following are the key points from the January

short-term indicators data published Friday by the Office for National

Statistics.

     - The fourth quarter trade deficit was revised sharply lower to stg7.8bn

from the stg10.8bn reported last month largely on an upward revision to the

export of services. That suggests trade will subtract 0.5pp from Q4 GDP,

compared to the 0.7pp drag reported earlier. - Construction output tanked in

January. Output was down 3.4% m/m, the largest m/m fall since June 2012 (-4.4%

m/m). The fall was attributed to reduced private housing starts which fell back

from a record high level in December. The ONS could not be drawn on the firms

used in its sample but given recently-collapsed outsourcing firm Carillion do

not operate in the private housing space January's fall in output reflects wider

weakening in the sector.

     - As expected, the re-opening of the Forties oilfield, the biggest in the

UK, accounted for much of the IOP rebound in January. As forecast in the MNI 5

Things preview, mining and quarrying output bounced back strongly, up 23.5% m/m

after December's 19.1% plunge. The disruption associated with the closure,

however, seemed to have played a part in the widening of the trade deficit in

January though this was something the ONS could not confirm.

     - Despite expanding for a record ninth straight month in January, the

manufacturing sector appears to be running out of steam. Monthly output was up

by only 0.1% m/m in January, the lowest outturn since last April and follows the

0.3% expansion in December. Over H2 2017, output expanded by an average rate of

0.42%. The sector's nine-month run of expansion will come under threat next

month when the data incorporates the adverse weather conditions firms faced in

late February.

     - Production of transport equipment was up 1.9% m/m in January, the third

best outturn over the last year, and follows data from the SMMT which showed a

record number of cars produced for export. While proxies of domestic demand

remain low, there was anecdotal evidence of higher imports of cars from non-Eu

countries in January.

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

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