1 May 2015
UK manufacturing and lending numbers move in different directions – ING
FXStreet (Barcelona) - James Knightley, Senior Economist at ING, reviews today’s UK data releases, noting that the numbers suggest the UK economy is in a decent shape, but possibility of any policy move by BoE in the near-term is negligible.
Key Quotes
“The UK manufacturing purchasing managers’ index for April has fallen back to 51.9 from a downwardly revised 54.0 in March. This is a disappointing outcome given the consensus was 54.6 and is the lowest reading since last September.”
“On the positive side it remains above the break-even 50 level, with expansion having continued unbroken for 2 years. The report suggests that the domestic story outperformed external demand where the strength of sterling may have dampened activity to some extent.”
“Nonetheless, manufacturing sector is dwarfed by services in the UK and there remains significant optimism regarding the outlook for that sector – the consensus is for the services PMI to hold at just under 59 next Wednesday.”
“Other data this morning includes credit growth which continues to perform robustly, suggesting that households remain upbeat. Net consumer credit rose £1.2bn on the month – you have to go back ten years to when the UK was previously seeing that level of borrowing on a consistent basis – while mortgage lending rose £1.8bn. This latter figure suggests that after a 2H14 slowdown we are starting to see a bit of strength returning to the housing market.”
“All in all today’s numbers suggest the UK economy is in decent shape, but there is little prospect of a near-term BoE move, especially with election uncertainty persisting.”
Key Quotes
“The UK manufacturing purchasing managers’ index for April has fallen back to 51.9 from a downwardly revised 54.0 in March. This is a disappointing outcome given the consensus was 54.6 and is the lowest reading since last September.”
“On the positive side it remains above the break-even 50 level, with expansion having continued unbroken for 2 years. The report suggests that the domestic story outperformed external demand where the strength of sterling may have dampened activity to some extent.”
“Nonetheless, manufacturing sector is dwarfed by services in the UK and there remains significant optimism regarding the outlook for that sector – the consensus is for the services PMI to hold at just under 59 next Wednesday.”
“Other data this morning includes credit growth which continues to perform robustly, suggesting that households remain upbeat. Net consumer credit rose £1.2bn on the month – you have to go back ten years to when the UK was previously seeing that level of borrowing on a consistent basis – while mortgage lending rose £1.8bn. This latter figure suggests that after a 2H14 slowdown we are starting to see a bit of strength returning to the housing market.”
“All in all today’s numbers suggest the UK economy is in decent shape, but there is little prospect of a near-term BoE move, especially with election uncertainty persisting.”