Trial now

Beef Exports Deal Expected, CPI Due

By Jamie Satchithanantham
     LONDON (MNI) - The Office of National Statistics' short-term indicators
dataset, due out August 10, will provide the final pieces of the Q2 IOP/trade
     In its provisional estimate of Q2 GDP growth, published July 26, the ONS
envisaged industrial production and construction faring better in June and the
preliminary poll of analysts' expectations point to similar results.
     Concerning IOP, the ONS pencilled in a return to growth in June albeit a
modest one. After contracting 0.1% m/m in May they saw a growth of 0.1% m/m in
June. The equivalent MNI median is a bit more optimistic, with growth of 0.4%
m/m expected.
     The preliminary findings from the MNI survey also see manufacturing
returning to growth. After contracting 0.2% m/m in May a 0.3% m/m rise is
expected by analysts. The ONS, on the other hand, saw manufacturing output down
0.1% m/m in June.
     After revising up May's month-on-month outturn 0.4pp to -0.8%, the ONS
forecast a punchy rebound in Construction output in June. At 1.8% m/m, this is a
touch over what the analysts polled in our survey felt likely. The MNI median
looks for a 1.5% m/m rise in output in June, for a 1.8% rise on the year.  
     Below are MNI surveys of analysts' forecasts for these indicators.
                           Jun         Jun            Jun            Jun
                    Industrial  Industrial  Manufacturing  Manufacturing
                    Production  Production         Output         Output
                         % m/m       % oya          % m/m          % oya
Date Out                10-Aug      10-Aug         10-Aug         10-Aug
Median                     0.2        -0.1            0.2            0.8
Forecast High              1.4         1.1            0.4            1.1
Forecast Low               0.0        -0.2           -0.1            0.5
Standard Deviation         0.4         0.4            0.2            0.3
Count                       11           8             10              8
Prior                     -0.1        -0.2           -0.2            0.4
Barclays                   0.1        -0.2           -0.1            0.6
Berenberg                  0.2         N/A            0.0            N/A
BofAML                     N/A        -0.2            N/A            0.5
Capital Economics          0.3         0.0            0.2            0.9
Commerzbank                0.0         N/A            N/A            N/A
Investec                   0.1        -0.2           -0.1            0.6
JP Morgan                  0.1        -0.1           -0.1            0.5
Lloyds TSB                 1.4         1.1            0.2            0.9
Morgan Stanley             0.3         N/A            0.3            N/A
Nomura                     0.4         0.1            0.4            1.1
Oxford Economics           0.4         0.1            0.4            1.1
Scotia                     0.1         N/A            N/A            N/A
Standard Chartered         N/A         N/A            0.3            N/A
     May 2017 was the warmest May on record since 2008 and, unsurprisingly,
utilities output was down 0.8% on the month, accounting for roughly a third of
the 0.1% m/m drop in IOP in May. Given June was also warm by historical
standards, a strong bounce back from this sector may not materialise.
     Observing the underlying trend, industrial production was down 1.2% in the
three months to May. Manufacturing, which accounts for roughly 70% of total IOP,
was down 1.1% in the same period and accounted for 0.79pp of the 1.2% fall.
Within this, output from the volatile pharmaceutical sector was down 7.8% 3m/3m.
     Official data showed second quarter production output contracting 0.4% q/q
in Q2 with manufacturing down 0.5% q/q. This, though rather gloomy, contrasts
with the recent, more bullish survey data.
     Though the manufacturing PMI fell to a three-month low of 54.3 in June it
recovered in July, rising to 55.1 off the back of near survey-record growth in
export orders.
     Meanwhile, the June CBI Industrial Trends survey also came in strong with
total orders at the highest level since May 1988.
                             Jun           Jun
                    Construction  Construction
                          Output        Output
                           % m/m         % oya
Date Out                  10-Aug        10-Aug
Median                       1.5           1.8
Forecast High                1.8           2.0
Forecast Low                 1.0           1.6
Standard Deviation           0.4           0.2
Count                          3             3
Prior                       -1.2          -0.3
BofAML                       N/A           1.8
Capital Economics            1.5           2.0
JP Morgan                    1.8           N/A
Lloyds TSB                   1.0           1.6
     In May, construction output fell by 1.2% both month-on-month and on a
three-month-on-three-month basis. The 3m/3m fall was the largest contraction in
output since September 2012, driven by falls in repairs and maintenance and all
new work.  
     This coincided with the IHS Markit/CIPS UK Construction PMI rising to a 17
month peak of 56.0, highlighting the aforementioned contrasting relationship
between the surveys and hard data. 
     In June the PMI moderated to 54.8, with softer activity recorded in all
three main categories - residential, commercial and civil engineering. The
survey reported that "a lack of new work to replace completed projects had
weighed on construction growth in June", with New Orders easing to its weakest
level since March.
     The survey also found firms noting evidence of "delays in decision making
among clients, partly linked to heightened economic uncertainty". 
     This came in advance of, and possibly pre-empted, BOE Governor Mark Carney
projecting softer UK business investment amid Brexit negotiations at the release
of the Bank's latest set of economic forecasts last Thursday.      
--MNI London Bureau; tel: +44 203-586-2225; email:
MNI London Bureau | +44 203-865-3812 |