Analysts at Nomura noted that the monthly GDP, the labour market report (particularly average weekly earnings) and the BoE’s policy decision are next week’s event highlights.
Key Quotes:
“Elsewhere, trade and industrial production figures are due and the RICS housing market report. “
“Trade, Jul (Mon 10 Sep): The goods trade deficit improved by just over £1bn between May and June thanks to a combination of an improving underlying deficit and a larger erratics surplus, only partly offset by a fall in oil exports. There is a risk of a wider deficit in July if the 6.4% rise in exports over the past two months reverses.”
“Monthly GDP, Jul (Mon 10 Sep): Because of the strong start to the May-Jul quarter (which was generated by growth in the single month of May of 0.3% m-o-m) it means that it is quite easy to see a 0.5% print on the non-overlapping quarterly growth rate (that is, growth of 0.5% in the May-Jul period relative to Feb-Apr). All we would need for that is for GDP not to decline by more than 0.1% during the month. And should GDP rise by 0.2% then that would be enough to push the quarterly rate of growth to 0.6%.”
“Industrial production, Jul (Mon 10 Sep): These figures have, in their own right, become a little less interesting to the markets of late because the new monthly GDP figures are published on the same day. While the surveys remain consistent with a small increase in manufacturing output in July, there is a risk of a negative print after the past two months of growth (a rise of more than 1% over that period).”
“Labour market report, Jul/Aug (Tues 11 Sep): Last month’s report was a mixed bag. On the positive side the unemployment rate fell from 4.2% to 4.0%, marking another fresh low since the mid-1970s. While employment grew less quickly than previously (just 42k during Q2), which was the smallest rise since last autumn, there was a more than 100k rise in full-time employment at the expense of falling part-time. Our favoured measure of wage growth (3m annualised rate of private sector regular pay) slowed in the latest report, but we have now seen monthly rises of 0.4% and 0.2% in the previous two months – as a result, another fairly normal 0.2% monthly increase would shift the annualised rate back up again to a decent rate of 3.5%.”
“BoE policy decision, Jul (Tues 11 Sep): The Bank of England is not expected to change policy, nor say much new following its decision to raise rates last month. The data, if anything, have softened a little relative to expectations, but we doubt that will have a material influence on the mood music in the September policy statement. We expect the decisions to keep rates and QE on hold to be unanimous (9-0).”
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