UK weekly commentary from Awa Brokers covering highlights, what we’re thinking about the markets and what your clients may be asking this week.
What we think
Dr Dayo Abinusawa MBA, PhD (Cantab), Head of Strategy and Research on what this report says about the economy.
The improvement in consumer sentiment, retail sales and construction output (MoM), are yet to be reflected in industrial production and GDP. According to ONS data, the total trade deficit is narrowing, in Q1 2020, this was largely driven by a £13.3 billion fall in imports, partly offset by a £12.0 billion fall in exports. Lockdowns reduced overall activity with reversals expected across a variety of sectors as lockdown restrictions are being eased.
Week ahead
BRC Retail Sales Monitor (YoY) (May) – In May, UK retail sales rose by 7.9% thanks to the growth in online sales, a 2.2% increase on April reading, following a sales decrease of 3.5% in March.
RICS House Price Balance (May) – British house prices are likely to fall as the market slowly begins to reopen, after a collapse in activity due to COVID-19 restrictions last month. Actual house price balance is expected to further decline by 3%. British house price declined by 21% in the previous period.
Thomson Reuters IPSOS PCSI (Jun) – Although the primary consumer sentiment is currently lower than March levels (53.5), sentiment improved between April and May, from 41.6 to 42.3.
UK Construction Output (YoY) (Apr) – Construction output is forecast to slump 36.2% in April, following a fall by 7.1% in March.
Construction Output (MoM) (Apr) – Construction output saw an increase of 0.4% in December. A decrease of 5.9% in March is followed by an expected slump by 25.8% in April.
GDP (YoY) – Britain's gross domestic product decreased by 1.6% year-on-year in the first quarter of 2020, the biggest fall over the last five years and compared with market expectations of a 22.3% decline.
GDP (MoM) – Britain's gross domestic product decreased in May by 5.8% month-on-month, slumping further from 0.1% in April, and compared with a market forecast of an 18.7% decline.
Index Services – There’s been no growth in index services since April, with a 1.9% decline in May compared with a 0.2% increase in April.
Industrial Production (YoY) (Apr) – UK industrial production likely to contract 19.3%, following an 8.2% decline in March.
Industrial Production (MoM) (Apr) – British industrial production decreased by 4.2% in March from 0.1% in February. This is followed by an expected decrease of 15.0% in April.
Manufacturing Production (MoM) (Apr) – Manufacturing production in the UK shrank 4.6% month-on-month following a 0.5% increase in February, and an expected 15.8% drop in April.
Manufacturing Production (YoY) (Apr) – UK manufacturing production shrank 9.7% year-on-year following a 3.9% decrease in February, and an expected 19.9% slump in April.
Monthly GBP 3M/3M Change – The UK economy shrank by 2.0% in the three months to March, after showing no growth in the previous period, and is forecast to decline by 10.0%.
Trade Balance (Apr) – The difference in the value between imported and exported goods and services declined 12.51 billion in March, worse than the forecast of -10.00 billion. Current expectations are an 11.62 billion decline in the trade balance, a reversal to the 0.85 billion gained in December.
Trade Balance Non-EU (Apr) – Goods imports from non-EU countries fell by 2.3 billion to 52.8 billion (three months to February), largely because of machinery and transport equipment and miscellaneous manufactures, which fell by 1.3 billion and 0.8 billion respectively. This is followed by an expected decline of 4.00% in April.
Inflation Expectations – Inflation expectations in the UK hit 3.0% in the week ended March 20, and was 3.1% in the previous period.
NIESR GBP Estimate – GDP estimate results in May showed an 11.8% contraction and a 2.0% decrease in the previous period.
NIESR Monthly GBP Tracker – Short-term predictions of monthly GDP growth showed a decline of 4.8% in April versus 0.2% increase in March (better than forecast in the same period).
CFTC GBP speculative net positions – The CFTC Commitments of Traders report in the week ended June 05 shows that actual net positions edged slightly lower, to 36.0K contracts from -22.3K.
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