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2 Jan 2015
UK manufacturing recovery remains disappointing – ING
FXStreet (Barcelona) - James Knightley, Senior Economist at ING, notes that this morning’s UK’s data releases show that the long hoped for economic rebalancing story is not playing out as envisaged, with the December purchasing managers’ index falling below than expectations to 52.5.
Key Quotes
“The manufacturing recovery remains disappointing with the December purchasing managers’ index falling to 52.5 from 53.3 versus expectations of a rise to 53.6. This suggests that the manufacturing sector’s growth rate will slow further, with manufacturing continuing to shrink as an overall proportion of the UK economy given the relative strength in the service sector.”
“Meanwhile, the consumer spending story continues to gain real momentum with net consumer credit increasing by £1.3bn in November, the biggest increase since February 2008. This helped fuel that bumper 1.7% MoM increase in November retail sales.”
“Indeed, the number of mortgage approvals fell by slightly less than the market was predicting. There was also some encouraging news on lending to small businesses, which increased at its fastest rate since the time series began in May 2011.”
“With employment and real household disposable income set to rise robustly in 2015 consumer spending looks set to become the UK’s main growth engine once again.”
“With the economy looking set to expand by 3% this year and debt levels creeping higher once again we suspect that the BoE will be looking to tighten monetary policy from 3Q15 onwards.”
Key Quotes
“The manufacturing recovery remains disappointing with the December purchasing managers’ index falling to 52.5 from 53.3 versus expectations of a rise to 53.6. This suggests that the manufacturing sector’s growth rate will slow further, with manufacturing continuing to shrink as an overall proportion of the UK economy given the relative strength in the service sector.”
“Meanwhile, the consumer spending story continues to gain real momentum with net consumer credit increasing by £1.3bn in November, the biggest increase since February 2008. This helped fuel that bumper 1.7% MoM increase in November retail sales.”
“Indeed, the number of mortgage approvals fell by slightly less than the market was predicting. There was also some encouraging news on lending to small businesses, which increased at its fastest rate since the time series began in May 2011.”
“With employment and real household disposable income set to rise robustly in 2015 consumer spending looks set to become the UK’s main growth engine once again.”
“With the economy looking set to expand by 3% this year and debt levels creeping higher once again we suspect that the BoE will be looking to tighten monetary policy from 3Q15 onwards.”