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Free AccessMNI: UK Prelim Data F'casts: Aug IOP, Construction and Trade
Repeats Story Initially Transmitted at 10:55 GMT Oct 9/06:55 EST Oct 9
By Jamie Satchithanantham
LONDON (MNI) - For the first time this year, monthly UK production output
registered back-to-back increases in June and July. Output was up 0.2% m/m in
July and followed a 0.5% m/m rise in June. Manufacturing output, which had
previously failed to deliver a single m/m expansion in 2017, rose 0.5% m/m and
together these point to a more optimistic outlook for the second half of the
year after a quite dire first.
It was the usual suspects, the typically volatile pharmaceutical and
transport components, that drove the July result. Transport equipment output was
up 7.6%, driven by a 13.7% increase (the largest since March 2009) in motor
vehicles, trailers and semi-trailers, preparing for the fleet of new models that
hit showrooms in September.
Data from the SMMT, however, has shown a marked fall in car production
starting early this year and this largely explains why the manufacturing data
has been so poor in 2017. The SMMT data show a rise in auto manufacturing in
July though this was followed up with a fall back in August. This pare back will
probably also be replicated in the ONS' data and could imply only a soft
expansion in manufacturing output.
Elsewhere, a colder than usual August could support utility production
though possibly offset by softer mining and quarrying data; some analysts cited
planned closures reportedly scheduled at selected North Sea oil fields for
maintenance work.
Overall, the conditions that have supported the recent uplift in the data
-- namely, the weak pound and stronger global demand -- are still in place and
could help extend the recent string of better performances into August.
Analysts see industrial production output rising 0.2% m/m in August with
manufacturing output also increasing by the same magnitude.
------------------------------------------------------------------------
Aug Aug Aug Aug
Industrial Industrial Manufacturing Manufacturing
Production Production Output Output
% m/m % oya % m/m % oya
Date Out 10-Oct 10-Oct 10-Oct 10-Oct
Median 0.2 0.9 0.2 1.9
Consensus 0.1 0.9 0.3 1.9
Forecast High 0.7 1.3 0.4 2.2
Forecast Low 0 1 0 0
Standard Deviation 0.2 0.2 0.1 0.5
Count 15 9 13 10
Prior 0.2 0.4 0.5 1.9
Barclays 0.1 0.8 0.1 1.8
Berenberg 0.3 N/A N/A N/A
Capital Economics 0.3 1.0 0.2 2.2
Commerzbank 0.2 N/A N/A N/A
HSBC 0.2 0.8 0.2 1.9
Investec -0.1 0.6 -0.1 0.3
JP Morgan 0.1 0.8 0.3 1.9
Lloyds TSB 0.7 1.3 0.3 2.0
Morgan Stanley 0.1 N/A 0.2 N/A
Natixis 0.3 1.0 0.4 2.1
Nomura 0.2 0.9 0.2 1.9
Oxford Economics 0.3 1.0 0.4 2.1
Pantheon 0.0 N/A N/A N/A
Scotia 0.1 N/A 0.1 N/A
Societe Generale N/A N/A 0.3 1.7
UniCredit 0.1 N/A 0.3 N/A
The construction sector seems to have been the worst affected by the UK's
decision last year to extract itself from the EU bloc. Major projects have been
put on hold as clients seek clarity amid economic and political uncertainty
before pushing ahead with plans.
Output is seemingly on a downward trend and failing a stronger performance
on Tuesday the data could all but point to a recession in the sector with a
contraction in Q3 likely after a 0.5% q/q fall in Q2.
This was further reinforced by last week's PMI data which saw construction
index retreat beneath the 50-mark for the first time in 11 months in September,
indicating output had indeed contracted.
Analysts see output up from July's -0.9% m/m fall but barely in expansion
at just +0.1% m/m.
----------------------------------------------
Aug Aug
Construction Construction
Output Output
% m/m % oya
Date Out 10-Oct 10-Oct
Median 0.1 0.2
Consensus -0.2 0.0
Forecast High 1.0 1.2
Forecast Low -1 -1
Standard Deviation 0.6 0.7
Count 10 6
Prior -0.9 -0.4
Barclays -0.2 0.0
Capital Economics 0.2 0.4
HSBC 0.5 0.4
JP Morgan 0.5 N/A
Lloyds TSB 1.0 1.2
Oxford Economics -0.2 0.0
Pantheon -0.5 N/A
Scotia 0.1 N/A
Societe Generale -1.0 -0.8
UniCredit 0.0 N/A
In the eye's of analysts, conflicting forces likely left the total trade
balance unchanged in August.
A mutual theme running across all soft data surveys in recent months has
been the continued, robust export performance of British firms. Against the
backdrop of the weaker currency and a stronger global landscape, British
exporters have seen demand for their goods pick up; evidence of this,
year-over-year growth in exports have now increased for four consecutive months.
Imports however have also held up during this time, preventing a narrowing
in the total deficit. Strong retail sales data in August, up 1.0% m/m and 2.4%
y/y, could mean demand for imports also remained high.
Analysts see the total trade deficit and the goods trade deficit roughly
unchanged at stg2.8bn and stg11.5bn respectively.
------------------------------------------
Aug Aug
Total Visible
Trade balance Trade
stg bn stg bn
Date Out 10-Oct 10-Oct
Median -2.9 -11.4
Consensus -2.8 -11.2
Forecast High -2.5 -11.0
Forecast Low -3 -12
Standard Deviation 0.2 0.4
Count 8 7
Prior -11.6
Capital Economics -3.0 -11.7
HSBC -2.7 -11.2
Investec -2.8 -11.6
Lloyds TSB -2.9 -11.0
Morgan Stanley N/A -11.0
Nomura N/A -12.0
Oxford Economics -3.0 -11.4
Pantheon -2.5 N/A
Societe Generale -2.9 N/A
UniCredit -2.5 N/A
Finally, last week saw the release of the latest national accounts (with
the 2017 Blue Book due for release October 31) and with this brought a raft of
revisions, mainly concentrated in UK household spending also affecting the
output components of GDP.
Having previously being pencilled in to have contracted 0.3% over the first
half of 2017, manufacturing output was revised up to have grown 0.3%.
Construction data, which was initially published to have contracted 1.3% q/q,
was updated for a considerably smaller 0.5% fall.
Likewise, the trade gap between exports and imports was revised lower. From
an initial zero contribution to Q2 GDP growth, net trade was updated to have
contributed 0.4pp to growth. All in all this means back-data from previous
months across these datasets will likely have been subject seen considerable
changes too.
--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com
[TOPICS: MTABLE]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.