UK Analysis: Aug IoP, Construction Up; IoP Could Lift Q3 GDP>

-UK August IoP +0.2% m/m; +1.6% y/y; Manufacturing +0.4% m/m; +2.8% y/y

-UK August Construction +0.6% m/m; +3.5% y/y

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - Industrial output and construction both rose in 

August, leaving production set to contribute positively to gross 

domestic product in the third quarter, despite a downturn in car 

production in August. 

     Total production rose by 0.2% in August, matching the MNI median 

forecast. On an annual basis, production increased by 1.6%, exceeding 

the MNI median of a 0.9% rise. 

     Output for the month of July was revised to show a 0.3% increase, 

better than to the 0.2% rise reported last month. That means production 

could fall by as much as 2.5% in September, and still leave output 

unchanged between the second and third quarters. 

     Industrial output has not fallen by such a large amount since 

plunging by 3.5% in September of 2012, suggesting that production could 

exert a positive influence on gross domestic production in the third 

quarter. Production comprises 14.0% of GDP. 

     The manufacturing sector accounted for much of the improvement in 

August production, rising by 0.4% between July and August, registering a 

2.8% annual gain, topping the MNI median forecast of a 0.2% monthly gain 

and a 1.9% annual rise. 

     A 2.7% rise in the production of metals products accounted for much 

of the strength, adding 0.22 percentage points to total output. That 

countered a 2.6% fall in the output of transport equipment, which 

subtracted 0.29 percentage points from the total. A sharp fall in car 

production after a 7.6% surge in transport equipment output in July 

accounted for much of the weakness, according to a National Statistics 

official. 

     Meanwhile, construction output rose by 0.6% in August, above the 

MNI median forecast of a 0.1% gain. Over the year to August, output 

increased by 3.5%, also topping the MNI median expectation of a 0.4% 

rise. 

     Over the month of July, the construction sector rose by 0.6%, 

partially reversing the downwardly-revised 1.0% decline reported last 

month. 

     That means construction must rise by 1.9% for third quarter output 

to match the outturn of the second three months of the year, which would 

represent the biggest rise since December of last year. Construction 

accounts for 6.1% of total output. 

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

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