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21 Dec 2015
GBP: The big three events of UK in the coming weeks – TDS
FXStreet (Delhi) – Research Team at TDS, lists down the key events of the United Kingdom in the coming weeks on which traders will be focusing on.
Key Quotes
“1. December PMIs (4/5/6 Jan): Early indications suggest that December’s PMI readings are likely to show at best a re-print of November’s numbers. We expect manufacturing to remain broadly flat at 52.6, while construction and services PMIs likely fell about a point, to 54.5 and 54.9, respectively, in part reflecting spillovers from downticks in PMIs for the rest of Europe.
2. 15Q3 Unit Labour Costs (23 Dec): As we slowly move toward an increase in Bank Rate, cost pressures will be of utmost importance to the MPC, as they’ve been keen to highlight in recent minutes and speeches. While usually a third-tier indicator, evolution in the cost of labour relative to productivity (ULC) will be an important gauge of their desire to hike rates: if wages grow at the same pace as productivity, inflation will remain benign. In this regard, 15Q2’s ULC print of 2.2% y/y was a positive development for future inflation, but with wage pressures abating in recent months, unless productivity growth slows commensurately, there are risks this could have just been a blip. We still anticipate an increase in ULC in 15Q3 on account of weak productivity growth, but the recent pace is unlikely to be maintained. If this week’s experimental Index of Labour Costs per Hour is any indication, there is scope for upside risks to ULC.
3. November PSNB ex-Banking (22 Dec): With the chancellor’s Autumn Statement out of the way, there’s typically less focus on the government’s net borrowing statistics. However, October’s data showed a significant jump up in net borrowing that was largely attributed to weak revenues. We’ll look carefully to November’s data to see if this was an early indication of slowing UK growth, or just an aberration that gets fully reversed.”
Key Quotes
“1. December PMIs (4/5/6 Jan): Early indications suggest that December’s PMI readings are likely to show at best a re-print of November’s numbers. We expect manufacturing to remain broadly flat at 52.6, while construction and services PMIs likely fell about a point, to 54.5 and 54.9, respectively, in part reflecting spillovers from downticks in PMIs for the rest of Europe.
2. 15Q3 Unit Labour Costs (23 Dec): As we slowly move toward an increase in Bank Rate, cost pressures will be of utmost importance to the MPC, as they’ve been keen to highlight in recent minutes and speeches. While usually a third-tier indicator, evolution in the cost of labour relative to productivity (ULC) will be an important gauge of their desire to hike rates: if wages grow at the same pace as productivity, inflation will remain benign. In this regard, 15Q2’s ULC print of 2.2% y/y was a positive development for future inflation, but with wage pressures abating in recent months, unless productivity growth slows commensurately, there are risks this could have just been a blip. We still anticipate an increase in ULC in 15Q3 on account of weak productivity growth, but the recent pace is unlikely to be maintained. If this week’s experimental Index of Labour Costs per Hour is any indication, there is scope for upside risks to ULC.
3. November PSNB ex-Banking (22 Dec): With the chancellor’s Autumn Statement out of the way, there’s typically less focus on the government’s net borrowing statistics. However, October’s data showed a significant jump up in net borrowing that was largely attributed to weak revenues. We’ll look carefully to November’s data to see if this was an early indication of slowing UK growth, or just an aberration that gets fully reversed.”