FLASH: weak UK IP growth and policy transmission
- The UK’s manufacturing PMI dipped 1-point to 53.9, but the weaker output balance is still consistent with monthly manufacturing output growth near 0.2%.- Warm weather has weighed on energy output, while oil and gas extraction will be much less supportive than Q1. I’m currently tracking Q2 IP growth of +0.1% q-o-q.
- Net consumer credit data was lousy as high refinancing needs already stretched gross lending. Mortgage lending was slightly higher, but probably only temporarily.
- Disappointing data are a discouragement to tighten policy, but the Nov-17 rate hike failed to transmit, so conditions are already looser than intended. The services PMI remains uncomfortably crucial to the BoE’s May policy decision.
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