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Market Comment
Focus on June industrial production numbers for Ireland, UK
07 August 2012
David McNamara
In a quiet day for macroeconomic data, markets will look to June's industrial production data for signs of continued weakness in UK manufacturing and further robust growth in Ireland. UK industrial production is expected to have fallen in excess of 4% on the month when data are released later today, driven by fewer working days in June due to the Jubilee celebrations. The official Q2 GDP release assumed an even larger 4.5% fall in June, so the final number could yet exceed this. A poor PMI number of 45.4 in July would suggest no let-up in the decline in July either, with the underlying weakness of the UK economy evident in recent macro numbers.
In contrast, Irish industrial production has been quite robust in 2012, with the 1.6% monthly upturn in May (equivalent to 4.9% year-on-year) bucking the negative eurozone trend. While there were worries that the eurozone recession would weigh on Irish industrial production concentrated in the export sector, these fears appear to have been unfounded with the defensive nature of the modern sector in particular, comprising technology and chemical industries, evident in 5.8% growth in May. A healthy PMI number of 53.1 in June and 53.9 in July would suggest that this expansion in industrial production continued in June. Data will be released later this morning.