Production and Trade
Today the ONS releases production data for April. This has added significance given that this will give us our first indication of manufacturing output for the second quarter of the year. Following on from a relatively weak first quarter (manufacturing expanded by a modest 0.2%) we hope to see a small pick-up this month, but lingering effects from the poor weather and a generally more subdued picture for the sector compared to last year could impede this. At the same time we will also get trade statistics for April. With global demand - although easing - remaining robust, and sterling still providing a supportive boost for the time being, we hope to see some healthy figures. We are forecasting trade to make a positive contribution to growth on the whole this year.
On Tuesday the ONS will release labour market data for April. This has been a consistent source of good news for the economy over the last year, with the unemployment rate steadily falling. It is currently at 4.2% - a 43 year low - and we have no reason to expect a change in this positive trend. Encouragingly pay, which had been subdued for some time, is also picking up. In the three months to March total regular pay for the whole economy expanded by 2.9%, meaning that given inflation’s downward trajectory, consumers saw a real pay increase for the first time in a year.
And finally on Wednesday we get inflation data for May. Prices have been easing back this year, with last month’s reading falling from 2.5% to 2.4%, significantly lower than the 3.1% recorded in November 2017. The fading effect of the sterling depreciation is broadly what is behind the fall in prices and this should continue to have an effect this month. However the recent upturn in oil price - contributing to higher energy and petrol costs - could counter this, and as a result the CPI is likely to remain unchanged this month.