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UK IP expected to grow 0.2% m/m in August, raising the y/y rate to 2.8% - RBS

FXStreet (Łódź) - Ross Walker, Senior UK economist at RBS suggests that UK Industrial production numbers for August, due out on Tuesday, should come in at 0.2% m/m and at 2.8% y/y, which would point to a 0.75% q/q growth for the sector in Q3.

Key quotes

"IP growth was rather variable in H1 2014, with fairly rapid expansion in Q1 (0.9% q/q) giving way to more tepid growth in Q2 (0.2%), though the average pace of expansion was some way above the long-run average for the sector."

"Survey data have tended to moderate in recent months – eg, the PMI output sub-index has fallen by almost 10 points to 51.5 in September (around 2 points below its long-run average)."

"The CBI industrial output balance has also shown some underlying moderation, though the deteriorating trend is less marked than on the PMI data."

"The BoE Agents scores reported 6-month lows in the domestic (1.9 from 2.2) and export (1.4 from 1.7) balances for manufacturing output."

"Overall, the surveys are consistent with ongoing growth in the industrial sector but there are clearer hints of some loss of momentum."

"The key question for policymakers is the extent to which this is a reflection of temporary influences or something more fundamental."

"With the euro area recovery faltering we expect a slightly slower pace of British IP growth in H2 2014 than what was seen in the first half of this year."

"We forecast manufacturing output to rise 0.3% m/m in August, raising the y/y rate to 3.5%."

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