U.K. August IP data hints moderate GDP growth rate in Q3

U.K. industrial production rebounded in August after two consecutive months of decline, rising at its fastest pace since February 2014. Mining & quarrying output (6.0% m/m, +0.9pp contribution) was the main driver, also recording its largest rise since February 2014. Manufacturing helped lift production, gaining 0.5% over the month (+0.3pp contribution). 

In terms of the main industrial groups, production was boosted by energy output, which rose by 4.1% m/m (+1.0pp contribution). Investment goods also supported the rise (2.5% m/m, +0.5pp contribution). Meanwhile, production of intermediate (-0.7% m/m) and consumer goods (durables: -1.4% m/m; nondurables: -0.1% m/m) were down over the month.

All in all, this further intensifies the manufacturing downturn, with the Q3 15 carry-over now at -0.6% q/q after -0.5% q/q in Q2. 

"Overall we believe the sector remains a cause for concern as a structural lack of competitiveness remains, itself magnified by strong currency and government policies (fiscal consolidation and the EU referendum). It is also in line with our expectation of GDP growth moderating to 0.5% q/q in Q3 after 0.7% q/q in Q2", states Barclays.