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All good things come to an end…

As we forecast in the last blog, the astonishing nine months of uninterrupted growth streak came to an end. Manufacturing production declined by 0.2% compared to January which was also slightly revised down to no growth, and December 2017 was slightly revised up by 0.1%.


The snow, probably had an effect, but we can’t be sure about that…

As said before, manufacturing activities are usually highly impacted by bad weather with goods undelivered and people struggling to go to work (working from home is not really an option for everyone), so it’s likely that the snow disruption experienced in the last week of February had an impact. However according to the ONS, no respondents clearly stated that the bad weather had an impact on production activities.


...well, here we are more sure about the effect on construction

Construction output was down again in February and this time the contraction was 1.6%. Activities in this sector are usually outside and so in this case it’s not only about input goods undelivered and people not getting into work, but it is also about snow covering half-done houses.

However this time around there is some good news about construction, indeed the ONS revised up estimates for the sector for the last nine months even if the growth in this period remains feeble especially when compared to the boom of the last quarter of 2016 and the first of 2017.


We cranked up the heater, but a little bit less than expected

Energy supply was up by 3.7% in the month. A positive number was expected but considering that January’s figures were negative, expectations were for an even bigger growth.

Thanks to this sector, industrial production was slightly positive in February with monthly growth up by 0.1%.

The overall result was below expectations and considering that the first week of March was influenced by bad weather, and so another weak result may be on the horizon, there are a few downside risks for the first GDP release for q1-2018.

Is the BoE still ready to rise its main rate in May?


They really don’t need that much energy down there

We talked about energy in the previous paragraph and we are kind of sure that with an average of 25°C, the Australian Gold Coast doesn’t really need to use a lot of energy to warm up houses and factories, and British Commonwealth Games athletes are probably enjoying some much better weather than their fellow compatriots at home.

As said at the beginning new trade data are out and the overall deficit in the three months to February slightly widened by £0.4 billion, but since the Games are on the news, let’s see how much we trade with the Commonwealth countries.

In 2017, trade with the other 52 Commonwealth countries made up 8.5% of total down from 8.7% in 2016. Unsurprisingly, the biggest share of trade within this group is held by the biggest countries - Canada, India, Australia, and South Africa - but also with Singapore which continues to be extremely linked to the UK.


Amongst countries with a significant share of trade with the UK, Nigeria was at the top in terms of trade growth in total trade for 2017, +31%. The Sub-Saharan country was followed by Kenya and Bangladesh – respectively with 24% and 22% growth.

When looking at manufactured goods, it is interesting to observe that the ranking is made by the same five countries but in a different order. India is at top with 20% share, followed by Canada with 16%, and Singapore with 15%. This should not be considered as a complete surprise considering the huge amount of trade involving oil and primary goods that the UK is doing with Canada and Australia.


Athletes, enjoy the weather and bring back some medals!