MNI DATA ANALYSIS: March IoP, Const Unlikely to Alter Q1 GDP>

-UK Q1 IoP +0.6% q/q vs +0.7% previous; Mar IoP +0.1% m/m

-UK Q1 Construction -2.7% q/q vs -3.3% previous; Mar -2.3% m/m

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - The marked slowdown in the UK economy over the first 

quarter appears is unlikely to be significantly revised on the basis of 

short-term indicators, with output in the industrial and construction 

sectors matching expectations in the month of March. 

     Industrial product rose by 0.1% between February and March, rising 

by 2.9% over the same period of 2017, largely in line with the MNI 

median forecast of a 0.1% monthly increase and a 3.0% annual rise. 

     National statisticians also estimated a 0.1% rise in the month of 

March when calculating the first release of first quarter GDP last 

month. Industrial production comprises 14.0% of total output. 

     An downward revision to January output pushed first quarter 

production growth to 0.6%, down from 0.7% reported in late April. 

However, that is unlikely to materially effect the 0.1 percentage point 

contribution to total growth included in the first estimate of gross 

domestic product, according to a National Statistics official. 

     GDP grew by a quarterly rate of just 0.1% in the opening three 

months of the year. National Statisticians estimated 0.1% monthly growth 

in the dominant service sector for the month of March, and any 

significant revision to service output could effect later estimates of 

first quarter GDP. 

     Manufacturing accounted for much of the sluggishness in the 

industrial sector, falling by 0.1% between February and March and rising 

by 2.9% over a year earlier, very close to the MNI median forecast of a 

0.2% monthly decline and a 2.9% annual gain. 

     Production of transport equipment slumped by 1.9% in March, shaving 

0.21 percentage points to total output. The Society of Motor 

Manufacturers and Traders reported a 13.3% slide in car production in 

March, in the wake of falling demand from both domestic and foreign 

buyers. 

     However, energy generation during an unseasonably-cold March 

countered the weakness in manufacturing, rising by 3.0% between February 

and March, adding 0.24 percentage points to total production. 

     Meanwhile, construction output fell by 2.3% in March, or by 4.9% 

over the same month of 2017, the steepest annual decline since January 

2013 when construction plunged by 7.1%. Analysts polled by MNI forecast 

a 2.3% monthly fall, matching the estimate included in the first release 

of GDP, and a 5.6% annual plunge. 

     That left the sector nursing a 2.7% decline over the first quarter, 

better than the 3.3% drop reported last month, but still the worst 

performance since the second quarter of 2012. An upward revision to 

February construction output, to a 1.0% monthly decline from the 

originally-reported 1.6% fall. 

     However, the revision will not materially affect the 0.2 percentage 

point reduction in GDP growth reported last month, according to a 

National Statistics official. 

     Construction output has now fallen for three consecutive months, 

but National Statistics officials were unable to quantify the effect of 

the collapse of outsourcing firm Carillion in late January, due to 

"confidentiality agreements." 

     Carillion's demise may have prompted a decrease in activity  in the 

"Public Other New Work" category, which slumped by 3.0% between February 

and March, and by 5.9% in the first quarter. Construction comprises 6.1% 

of total output. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]