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UK manufacturing sector on course for further expansion in the coming months, says Lloyds Bank

UK's manufacturing output rose by 1.2 percent in the last quarter of 2016. Boost to competitiveness from sterling’s depreciation last year was probably a key driver of this upturn. The underlying trend is clearly upward, as is indicated by the 1.9 percent rise in Q4 production when compared to the same quarter a year ago, says Lloyds Bank.

Official data for the month of January showed a small fall in output in January and the February purchasing managers’ survey showed a modest decline in the level of the headline index from the previous month. Analysts at Lloyds Bank opine that the declines are probably just temporary retreats after outsized gains in previous months.

"With orders as measured by both the PMI and CBI surveys strong enough to point to further output gains over the next few months, the sector still seems on course for further expansion," said Lloyds Bank in a report.

Fall in manufacturing investment, however, raises concerns about the sustenance of upside in the longer term. UK manufacturing investment probably fell by more than 4 percent last year, its weakest performance since 2009.  The start of the Brexit negotiations will likely create more uncertainty which could hamper investments going forward. Continued sluggish investment growth may add to concerns about the UK’s modest productivity performance, adds Lloyds Bank.

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July 26 14:00 UTC Released

USNew Home Sales Chg MM*

Actual

0.8 %

Forecast

1.4 %

Previous

2.9 %

July 26 14:00 UTC Released

USNew Home Sales-Units*

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0.610 mln

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0.615 mln

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0.610 mln

July 26 15:30 UTC 5050m

JPForeign Exchange Flows*

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-2.949 bln

July 26 15:30 UTC 5050m

BRForeign Exchange Flows*

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-2.949 bln

July 26 15:30 UTC 5050m

BRForeign Exchange Flows*

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-2.949 bln

July 26 18:00 UTC 200200m

USFed Funds Target Rate

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Forecast

1.125 %

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1.125 %

July 26 23:00 UTC 500500m

KRNew Home Sales-Units*

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Forecast

2.7 mln

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2.9 mln

July 26 23:00 UTC 500500m

EZGDP Growth QQ*

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0.6 %

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1.1 %

July 26 23:00 UTC 500500m

EZGDP Growth YY*

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Forecast

2.7 %

Previous

2.9 %

July 26 23:00 UTC 500500m

KRGDP Growth QQ*

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Forecast

0.6 %

Previous

1.1 %

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