| Consensus | Actual | Previous | |
|---|---|---|---|
| Industrial Production - M/M | -0.6% | -0.7% | 1.8% |
| Industrial Production - Y/Y | 0.4% | 0.7% | |
| Manufacturing Output - M/M | -1.0% | -0.8% | 2.4% |
| Manufacturing Output - Y/Y | 3.0% | 3.1% |
Highlights
Industrial production had a poor start to the current quarter. A 0.7 percent monthly decline was the steepest since last August and slightly more than expected although it only reversed a portion of June's unrevised 1.8 percent spurt. Annual growth was 0.4 percent, down from 0.7 percent but only a 2-month low.
Manufacturing performed slightly worse with a 0.8 percent monthly drop although this too only unwound a fraction of June's 2.4 percent bounce. The fall here reflected decreases in nine of the 13 subsectors, most notably, rubber and plastic products (5.5 percent) and computer, electronic and optical products (3.2 percent).
Elsewhere, total industrial production was boosted by a 1.9 percent gain in mining and quarrying but depressed by declines in water supply and sewerage (0.5 percent) and electricity and gas (1.5 percent).
The data remain very volatile but on a 3-monthly basis overall goods production was up 0.6 percent and manufacturing output fully 1.7 percent. As such, the July update still leaves a markedly brighter picture of the sector than that painted by recent PMI surveys. More generally, today's data leave both the UK RPI (9) and RPI-P (19) in positive surprise territory meaning that overall economic activity is running a little ahead of market forecasts.
Manufacturing performed slightly worse with a 0.8 percent monthly drop although this too only unwound a fraction of June's 2.4 percent bounce. The fall here reflected decreases in nine of the 13 subsectors, most notably, rubber and plastic products (5.5 percent) and computer, electronic and optical products (3.2 percent).
Elsewhere, total industrial production was boosted by a 1.9 percent gain in mining and quarrying but depressed by declines in water supply and sewerage (0.5 percent) and electricity and gas (1.5 percent).
The data remain very volatile but on a 3-monthly basis overall goods production was up 0.6 percent and manufacturing output fully 1.7 percent. As such, the July update still leaves a markedly brighter picture of the sector than that painted by recent PMI surveys. More generally, today's data leave both the UK RPI (9) and RPI-P (19) in positive surprise territory meaning that overall economic activity is running a little ahead of market forecasts.
Market Consensus Before Announcement
Industrial production is expected to fall back 0.6 percent in July following a surprising 1.8 percent surge in June. Manufacturing output, which shot up 2.4 percent in June, is expected to fall 1.0 percent.
Definition
Industrial production measures the physical output of the mining and quarrying, manufacturing, gas and electric, and water supply and sewerage sectors. Manufacturing is seen as the best guide to underlying developments as the other subsectors can be highly volatile on a short-term basis. Estimates are largely based on a monthly business survey of roughly 6,000 companies.
Description
Industrial and manufacturing outputs are watched carefully by market participants despite the decline in the importance of manufacturing in the UK economy. Manufacturing output is the preferred number rather than industrial production which can be unduly influenced by electrical generation and weather. The manufacturing index is widely used as a short-term economic indicator in its own right by both the Bank of England and the UK government. Market analysts also focus on manufacturing and its sub-sectors to get insight on industry performance.
Industrial production accounts for less than 16 percent of the economy within which the key manufacturing sector is worth about ten percentage points. Total manufacturing is divided into thirteen sub-sectors, ranging from food, drink and tobacco through chemicals and chemical products to electronics and transport equipment. Consequently, this report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.
Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.
Industrial production accounts for less than 16 percent of the economy within which the key manufacturing sector is worth about ten percentage points. Total manufacturing is divided into thirteen sub-sectors, ranging from food, drink and tobacco through chemicals and chemical products to electronics and transport equipment. Consequently, this report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.
Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.
