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Industrial production: German pull back and UK slippage expected – TDS

FXStreet (Delhi) – Richard Kelly, Head of Global Strategy at TD Securities, expects significant pull-back in the Germany’s August number, by -1.5% m/m, against market consensus of 0.2% m/m while the UK industrial production in the manufacturing sector is expected to slip a further 0.1% m/m in August, adding onto the 0.8% loss in July and reflecting continued pressures on export-oriented producers (consensus: +0.3%).

Key Quotes

Germany: Like last year, auto production temporarily pulled back sharply in August (-22% m/m), on account of shifted shutdown schedules at auto plants that the seasonal factors don’t pick up. But since this has now mostly reversed in September (+15% m/m), we view this dip as mostly temporary, and it should be reflected by healthy German IP growth in September.

UK: The manufacturing PMI has fallen sharply off its early-2015 levels, and has declined in 3 of the last 4 months, suggesting that this sector of the economy is facing challenges in the face of an appreciating GBP.

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