In January, manufacturing output of the UK recovered, growing 0.7% m/m after falling 1% in the previous three months. According to the CBI Industrial Trend survey, output projections for February are slightly weakening, whereas manufacturing PMI output index dropped sharply to 53.2 in the month. Hence, the surveys see that certain decline has taken place in manufacturing output, according to Societe Generale. The drop in the PMI reading was slightly overstated as February’s increase was much above the trend.
“Accordingly, we predict a fall of 0.3% mom”, added Socitete Generale.
Meanwhile, the trade data indicates that growth in export is easing; however, trade deficit is oscillating in a narrow range, noted Societe Generale. The world trade growth is most likely stabilizing. Moreover, euro area GDP growth is faring well; hence export growth should level out. However, the UK GDP growth is slowing that might ease import growth.
“For the time being, we expect the trade deficit to stay within the recent range, looking for a minor widening from £3459mn to £3700mn”, says Societe Generale.
