U.K. construction output likely rebounded in November, trade deficit to have widened

The U.K. construction output is expected to have rebounded in November. Several commentators are becoming very excited regarding the relative buoyancy of the construction sector as seen in the construction PMI and RICS survey readings. However, this is not shown in the hard data.

Within manufacturing, output in the sector is performing slightly better than treading water. However, the strength of those surveys provides a supportive tone to the data so that after declining 0.6 percent sequentially in October, the sector is expected to have rebounded 0.5 percent month-on-month, stated Societe Generale in a research report.

Meanwhile, trade deficit is likely to have widened in the month. The deficit on trade in goods and services contracted two thirds in October to GBP 1971 million from GBP 5812 million in September. Most of this dramatic rebound was due to the favorable combination of a decline in imports of goods of GBP 1987 million and a rise in exports of GBP 2134 million that reduced the trade in goods deficits from GBP 13,832 million to GBP 9711 million.

“These big swings look unsustainable, even allowing for the welcome surprise of increasing manufacturing export orders in response to the weaker pound. Thus we expect a bounce in the total deficit to GBP 4000 million in November”, added Societe Generale.