UK headline industrial production was stronger than expected

United Kingdom headline industrial production was stronger than expected at 0.4%m/m (cons -0.2%m/m) but a lot of the strength came from oil and gas extraction which is very volatile. The manufacturing production component (a better underlying indicator) was weak at -0.6% m/m. 

The manufacturing PMI has been stumbling of late but even so this looks poor. In terms of GDP for Q2 though, it is the headline IP number which matters and this is upside news from that perspective.

Tonight we get the UK Summer Budget where the takeaway is expected to be that the new govt looks to do more, sooner in terms of cutting the deficit and welfare budget. That means a considerably reduced borrowing target for 2015-16.