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UK manufacturing output likely stagnated in October

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 7, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Mumbai) - UK industrial and manufacturing output numbers is scheduled for release tomorrow at 09.30GMT. A report from the EEF and DLA Piper released today shows Britain's manufacturing sector will likely end the year on a bad note. Output has likely have stagnated in October. It is believed to have declined to its lowest levels since 2009. Domestic and export orders have also 'deteriorated', the report noted. Annual manufacturing production can be expected to decline 0.1 per cent drop this year. The sector however is likely to recovery to 0.8 per cent growth next year.

    Lee Hopley, chief economist at EEF added that this downbeat mood may not be same for all industry sectors. He however warned “but it certainly seems to be spreading as the challenges have mounted through this year – from the collapse in the oil price, slower world trade growth and weaker than expected construction activity.'

    Manufacturing account for about a tenth of the economy and has dragged on an otherwise solid economic recovery which has been prompted by consumers. Tomorrow’s data, if shows a fall in output will spell bad news for the BoE which will meet this Thursday to take interest rate related decision. 'The contraction of the sector in 2015 appears to have been a real blow to confidence and the outlook for next year is also rather gloomy”, Richard May, Head of the Manufacturing sector at DLA Piper observed.

    A survey published on 19th November showed British manufacturers expect their output will fall in the coming three months, the first such decline in three years. The Confederation of British Industry also mentioned that expectations for manufacturing output over the next three months worsened to -6 from +5 in October, the first prediction of a fall since November 2012. Chemicals, mechanical engineering and metal manufacture sectors were the downward drivers. The CBI added the total orders balance of its monthly industrial trends survey rose to -11 in three months to November. The figure was up from -18 in October which had been the weakest in more than two years.

    UK’s economy had grown faster than other developed countries in 2014. This year growth was seen slowing in the third quarter. The economy was primarily hurt by weakness in manufacturing.

    However all is not lost. Howard Archer, chief UK and European economist at IHS Global Insight, pointed out that manufacturers can take heart from rise in domestic demand. Manufacturers are likely to be helped by very low oil and commodity prices “which increases their ability to price competitively”, Archer said.
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