UK: Weaker growth – Rabobank

By FXStreet Jane Foley, Research Analyst at Rabobank, suggests that the UK economy has collected a hefty helping of nasty headlines this week.

Key Quotes

“First came yesterday’s news that the March trade deficit was the biggest since 2008 and that the deficit with the EU was the largest on record. Then came today’s realisation that UK March factory output has registered its biggest fall since 2013. Manufacturing output fell by a shocking -1.9% y/y.

Although the weight of current UK economic data releases are still referring to Q1, the indications from figures referring to the early stages of Q2 offer no comfort. These included the softer expected GfK consumer confidence and CBI business optimism surveys in addition to the Markit/CIPS PMI surveys of manufacturing, construction and the services sector – all of which undershot market expectations. According to the April PMI surveys, the manufacturing sector in the UK is now contracting while the pace of expansion in the much larger services sector has shifted into a lower gear.

Tomorrow’s release of the May Inflation Report gives the BoE the opportunity to give recent weak economic data releases some more context. The Bank’s current projections for GDP growth are well above those in the …read more

Source:: FX Street