Market Overview

UK Manufacturing Output Preview: Mild Improvement In UK Manufacturing Not Enough To Push GDP To High Gear

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  • The UK manufacturing output is expected to increase 0.1 percent m/m in August after falling -0.2 percent in July. 
  • The UK monthly GDP is expected to decelerate to 0.1percent m/m in August. 
  • The IMF lowered the UK GDP forecast for 2018 to 1.4percent, down by -0.2 percent from April prediction.

The UK manufacturing output is set to rise 0.1 percent over the month in August after falling -0.2 percent m/m in the previous months, the Office for National Statistics is scheduled to report on Wednesday, October 10 at 8:30 GMT.

At the same time, the UK industrial production is expected to rise 0.1 percent m/m in August. The manufacturing output is expected to increase by 1.1 percent y/y, unchanged from July while industrial production is expected to rise 1.0 percent y/y, up from 0.9 percent y/y in August. 

The second month of the third quarter saw the manufacturing sector decelerating according to the forward-looking surveys like the one from IHS/Markit. The purchasing managers' index (PMI) in manufacturing decelerated in August to 52.8 from 54.0 in July. but the August manufacturing PMI was later revised upward to 53.0. 

UK manufacturing recorded slight improvement in September with the performance of the UK manufacturing sector in sub-sections of the output and new orders gained traction together with the revival new export business that contracted in August. While UK manufacturing PMI fell to 53.0 after revision, the activity picked up to record 53.8 in September. 

Even with the UK manufacturing rising mildly in September, the third quarter performance of the manufacturing sector was weak with the summer months of June percent m/m.  This should also be reflected in the monthly UK GDP growth rate that is expected to decelerate to 0.1 percent m/m in August as well. 

Lower prospects for the UK growth in times of increased Brexit uncertainty were also reflected in the fresh forecast for the UK GDP growth from the International Monetary Fund that now expects UK GDP to rise 1.4 percent in 2018, down -0.2 percent compared to April release of the World Economic Outlook. 

Posted-In: Brexit FXStreet UK Manufacturing OutputNews Forex Markets

 

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