UK: Dreadful industrial output and larger than expected trade deficit - BBH

Research Team at BBH, suggests that the market was given a handy reason to sell sterling today, but it failed to take the bait.

Key Quotes

“The UK reported dreadful industrial output figures. Industrial output for February was expected to have risen by 0.1% and instead it fell by 0.3%. Adding insult to injury, the January series was shaved to 0.2% from 0.3%. More troubling was the 1.1% drop in manufacturing output. It is the largest decline since May 2014. The market had anticipated a 0.2% decline. The January series was revised to 0.5% from 0.7%. The year-over-year pace is -1.8%, which is the largest decline since July 2013.

Separately, the UK reported another larger than expected trade deficit. The goods trade deficit came in at GBP11.96 bln, which was over 10% larger than expected. The overall trade balance was GBP4.84 bln, which was nearly a third larger than the Bloomberg consensus. The goods deficit with the EU stood at GBP23.8 bln in the three months through February, which is the widest since the time series began in 1998. The macro-picture is one of a larger than expected budget and trade deficit in early 2016, as well as a weakening industrial sector.”