MNI: UK Preliminary Data Survey - November IOP, Trade

By Jamie Satchithanantham

     LONDON (MNI) - The first batch of economic data from the Office of National

Statistics (ONS) in 2018 arrives Wednesday in the form on the latest short-term

indicators pack and the data from the industrial production (IOP)and

construction will feed directly into the first estimate of fourth quarter GDP,

due out on Jan 26.    

     Manufacturing output rose for a sixth successive month in October and

although it was only a modest 0.1% m/m rise it should be viewed in the context

of the 0.7% m/m surge in September. The drastic change in the sector's fortunes

in H2 2017 has been attributed primarily to the synchronised pick-up in global

demand and recent survey data points to this trend continuing. 

     The manufacturing Markit/CIPS purchasing managers' index climbed to a

51-month high of 58.2 in November, citing "solid domestic demand and steeper

gains in new export business", while the month's CBI Industrial Trends Survey

(ITS) also came in very strong. The ITS Order Books balance grew at the

strongest pace since August 1988 while the Export Orders balance hit the

joint-highest level in over two decades. 

     The surveys have tended to run more strongly than the official data

recently and so should be taken with a grain of salt but the fact both have

signalled strong demand, domestic and external, should bode well for both the

IOP and trade figures.     

     Within IOP, utility output could be set for an expansion in output too

after temperatures dropped to more normal levels in November following a warmer

than usual October.

     At this preliminary stage, the median values of analysts' IOP and

manufacturing forecasts stand at 0.4% m/m and 0.3% m/m respectively, both better

than their October readings.

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

                 Nov         Nov            Nov            Nov      Nov      Nov

                                                                  Total

          Industrial  Industrial  Manufacturing  Manufacturing    Trade  Visible

          Production  Production         Output         Output  Balance    Trade

               % m/m       % oya          % m/m          % oya   stg bn   stg bn

Date Out      10-Jan      10-Jan         10-Jan         10-Jan   10-Jan   10-Jan

Median           0.4         1.8            0.3            2.8     -1.4    -10.7

High             0.8         2.1            0.6            3.1     -1.0    -10.3

Low              0.3         1.6            0.3            2.7     -2.0    -11.3

Std Dev          0.1         0.2            0.1            0.2      0.4      0.3

Count              9           6              7              5        4        6

Prior            0.0         3.6            0.1            3.9     -1.4    -10.8

B'berg           0.4         N/A            0.3            N/A      N/A      N/A

Capital          0.5         1.8            0.3            2.7     -1.5    -10.9

C Suisse         0.4         1.8            N/A            N/A      N/A      N/A

Commerz          0.4         N/A            N/A            N/A      N/A      N/A

Investec         0.8         2.1            0.6            3.1     -1.3    -10.7

Lloyds           0.6         1.8            0.3            2.8     -1.0    -10.3

MS               0.5         N/A            0.4            N/A      N/A    -10.5

Nomura           0.3         1.6            0.3            2.8      N/A    -10.6

Oxford           0.4         1.9            0.3            2.8     -2.0    -11.3

     While export orders may have come in healthy in November, whether the trade

deficit narrows or widens will be dependent on the size of the offsetting effect

provided by import price inflation. 

     Core export prices rose 1.8% 3m y/y in October but increases in fuel prices

witnessed in recent months have meant that equivalent measure of import prices

has run at a pace twice as high.

     Despite widening, the overall trade deficit settled at stg1.405bn in

October and is running better than a year prior. Between January and October

2017 the total trade balance has shown an average monthly deficit of stg2.198bn,

below the stg3.508bn reading over the same time frame in 2016.    

     On balance, analysts see the November trade deficit unchanged at stg1.4bn

with a visible trade deficit also unchanged at stg10.8bn.

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

[TOPICS: MTABLE,MABDT$,M$B$$$,M$E$$$]