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Analysts at Nomura point out that the UK’s trade deficit ballooned to £14bn in April (close to a record) thanks almost entirely to a worsening in the balance on erratic items.

Key Quotes

“In fact, the underlying deficit, which strips out erratics and oil, was broadly unchanged on the month. And unwinding of the erratic move could narrow the deficit back to similar levels to that in March (around £12bn).”

Industrial production: Manufacturing output fell for a third consecutive month in April, the monthly decline being the most sizeable for over five years which in turn had the effect of halving the annual rate of growth to just 1.4%. Overall industrial production fell by a little less thanks to a partial offsetting rise in mining and quarrying output of nearly 7% between March and April. With the output index of the PMI having risen in May and the CBI’s output balances generally having remained upbeat we would not be surprised to see some snapback in production in May.”

GDP: This is a particularly important report as it contains the first set of rolling monthly GDP figures ever published for the UK – switching from the quarterly release schedule (with interim monthly revisions) that has operated until now. The data will be published alongside the monthly industrial and services output releases and are said to contain a back series. It means that the previous “first estimate” of each full quarter’s GDP will be delayed by around two weeks, which has the benefit of increasing the amount of underlying data that makes up the estimate.

NIESR has had a good record of estimating monthly GDP over recent years and it is currently suggesting a Mar-May quarterly growth rate of 0.2% q-o-q. With the BoE increasingly seeing the slowing in growth earlier this year as temporary we think the risks are to the upside to this official estimate of GDP growth (note the BoE expects GDP in the full Apr-Jun quarter to grow at 0.4% q-o-q).”