FLASH: surprise industrial crash in Apr-18
- Manufacturing output in April abruptly contracted by 1.4% m-o-m, contrary to widespread expectations for slight growth and despite the PMI’s rebound.- Metals and transport equipment drove most weakness, although the former is at odds with a surge in steel output. A new methodology and seasonal factors may have exaggerated the weakness.
- Semi-manufactured goods imports support the soft signal and exports were also disappointing. Construction output failed to rebound much in April either, but it remains highly prone to upward revisions.
- Even allowing for some positive payback in May, industry looks likely to weigh surprisingly heavily on Q2 GDP growth. I’m now tracking 0.3% q-o-q, which is slightly below the BoE’s forecast and could delay a hike if there is more weakness.
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