User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday July 14, 2008 - 10:21:35 GMT
Lloyds TSB Financial Markets -

Share This Story:
| | Email

Economics Weekly - UK manufacturing to avoid recession; Weekly economic data preview - UK inflation data key this week

Economics Weekly

UK manufacturing to avoid recession

Manufacturing activity has fallen in the last three months…
Despite a boost from the fall of 12% in the UK’s tradeweighted Index (TWI), manufacturing output fell by 0.5% in May and industrial production dropped 0.8%. A fall in UK energy output is understandable, however, as North Sea oil and gas extraction is dropping fast, even as prices rise, because of the difficulty of getting to the reserves that are left. Production from these fields is down by 40% from the peak in 1999, with a fall in 2007 alone of 3½%. But the critical question is why manufacturing output is also down and what this may mean for economic growth in the wider economy. If manufacturing output is flat in June, output would have fallen by 0.5% in the second quarter, after rising by 0.3% in Q1, taking 0.1% off overall gdp growth in the period.

…and the implication is that alongside the construction and services sector it is headed for recession…
It appears from the current weakening bias of the UK Purchasing Managers Indices (PMI) that manufacturing is slowing as much as the services and construction sectors and this could threaten growth in the whole economy further at a time when it is rising by just 0.3% a quarter. Chart a shows, however, that the PMIs would have to fall even further below 50 to suggest outright recession - in 2001 the composite index was below current levels and yet the economy still expanded by 2.4%. But the worry has to be that manufacturing activity slips back even further, alongside weaker economic activity in the US and Europe - its key overseas markets - and because of the higher financing costs and lower supply of funds associated with the credit crisis. This would certainly be a fair inference to draw from recent data, with manufacturing export prices up 11% in the year to May and almost offsetting the boost from a 12% fall in the TWI.

Further, the index of manufacturing production is lower than it was 8 months ago, with most of the weakness associated with consumer related sectors, likely due to the housing market slowdown in the UK. Chart b illustrates this point, with consumer durables and non durables posting a big slide in the last three months. But intermediate goods output has also slid, alongside that of capital goods production, though the latter is still showing positive growth. Taken on this basis, there is little prospect of any boost to the wider economy from the manufacturing sector, even though economic growth in Europe is relatively holding up, expansion in the emerging markets is still in high single figures and the pound has become more competitive overseas than at any time since 1992.

…but, we would urge caution in being too dismissive of manufacturing’s prospects for this year and next
With UK manufacturing jobs still being lost by 2-3% a year, productivity is rising by a similar amount and unit labour costs - a key measure of international competitiveness between firms - was up by only 0.8% on an annual basis in the three months to April. This means that manufacturing industry is still competitive – even though it is not as large as it once was as a share of gdp (down to 14% in 2007) or contributing as much to exports. As a result, the surprise would be if there were no rise in manufacturing production in the near future to reflect the rise there has been in export volumes, see chart c. However, it is the case that new export orders have taken a tumble, see chart d, perhaps reflecting the rise in export prices which in turn implies a desire by firms to boost profits rather than increase overseas sales volumes (though the level of export orders remains high). Chart e suggests that manufacturing orders in general are the best since 2004, although domestic orders have moved back into negative territory after being slightly positive in recent months.

A more powerful point about the current weakness of manufacturing output is that the experience of the 1992 devaluation suggests that it is still too soon to be sure that there will be no increase in output. Chart f shows that there has been the sort of fall in the UK’s TWI that is usually associated with a subsequent rise in manufacturing output. However, chart g shows that this response can take some time. The experience in 1992 was that manufacturing output remained weak for many months after the TWI initially fell and export prices rose, but then a fall in export prices occurred and manufacturing output rose quite rapidly. While not expecting an exact repeat of that this time round, it does seem too soon to suggest that manufacturing output will not grow more rapidly in response to gains in UK TWI competitiveness - especially if allied with the productivity gains that UK manufacturing is currently enjoying.

In summary, UK manufacturing is poised between boosting the overall economy and going into recession
The key message from our analysis is that it is too soon to expect the fall in the UK’s TWI to boost manufacturing output and that in 1992 output continued to slide after the initial fall in the currency. However, output eventually responded quite powerfully. This rise in manufacturing activity occurred despite initially higher export prices, which then fell back. The key seems to be about whether the rise in competitiveness is judged by firms to be sustainable or not. With monthly manufacturing production data volatile, it is likely that there will be a recovery in manufacturing output in the months ahead and the sector will boost the economy rather than help to drag it into recession. However, this will not be enough to prevent a sharp slowdown in overall economic growth from taking place.
Trevor Williams
Chief Economist, Corporate Markets

Weekly economic data preview W/c 14 July 2008

UK inflation data key this week

The UK, the US and the Eurozone (final) CPI inflation data are likely to highlight the monetary policy dilemma facing central banks. The Bank of England kept base rates steady at 5% at last week's MPC meeting, despite CPI inflation running well above the 2% target and projected at 3.6% in May, and there is clear evidence that Q2 growth slowed further from 0.3% in Q1, preventing a rate hike. This week's publication of a fifth consecutive rise in claimant count unemployment may exacerbate economic concerns. Since raising interest rates by 0.25% to 4.25% on 3 July, the ECB has adopted a neutral position on future interest rates, but there is still a possibility that it will do another 0.25% hike by the end of the year should CPI inflation surprise on the upside (expected to be confirmed at 4% in June) and/ or economic growth proves more resilient. The Fed publishes the minutes of its 24-25 June meeting, and Bernanke's semi-annual Monetary Policy testimony to the House Financial Services Committee will outline the Fed's latest projections for GDP growth, employment and CPI inflation in 2008-10. The Bank of Japan and the Bank of Canada are likely to hold interest rates at 0.5% and 3%, respectively.

• The UK has a busy economic calendar, featuring CPI inflation, producer prices, BRC retail sales and the labour market report. CPI inflation has risen from a low of 1% in September 2002 to a peak of 3.3% in May, see chart 1. Our forecast for June is a rise to 3.6%, therefore, the second consecutive month that CPI inflation has exceeded the BoE's 3% upper limit. We forecast RPI at 4.1% (4.3% in May) and RPIX unchanged at 4.4%. Higher RPI growth may not feed through to stronger earnings growth, however, as employment and earnings growth are both falling as the economy slows. Jobs data are likely to show a fifth consecutive monthly rise in claimant count unemployment , while average earnings growth on a 3-month rolling average basis may have slowed to 3.7% in May from 3.8% in April. However, growth of producer input prices reached 30.3% in June, underpinning the BoE's concerns about near term inflation risk. BRC retail sales survey data will be interesting given the fact that the official numbers surprised to the upside in May. Finally, UK money supply growth and public finance data for June should be supportive of close to trend rather than falling GDP growth.

• Fed Chairman Bernanke's semi-annual testimony on the state of the economy is likely to include upward revisions to its 2008 PCE inflation projections, last made in April, of 3.1 to 3.4% and 2.2 to 2.4% for core inflation. 2008 GDP growth and employment may be revised from 0.3 to 1.2% and the unemployment rate from 5.5 to 5.7% of the workforce. In terms of data releases, consumer price inflation may have risen to 4.5% in June, from 4.2% in May, while core prices, excluding food and energy, may have risen from 2.3% to 2.4%, see chart 2. Producer prices may have risen by 8.6% in June (7.2% in May), highlighting the potential upward risk to consumer prices. Another key data release published this week is advance retail sales for June - we expect growth of 0.4% on the month, another strong number following 1% growth in May, reflecting household tax rebates. Key housing market data includes June housing starts and building permits. In addition, the Empire Manufacturing survey and industrial output data, including capacity utilisation will inform on the health of US manufacturing

EU-15 CPI inflation for May should be confirmed at 4% for June (well above the ECB's 2% target), giving justification to the decision to hike 0.25% to 4.25%. In addition, the German ZEW survey may fall to -55 in July from the low of -52.4 in June, underpinning the ECB's decision to send out a neutral interest rate bias in its accompanying statement. EU- 15 industrial production may have contracted in May, which may raise concern that regional exports are eventually feeling the adverse effects of the strong euro, thereby dampening overall GDP growth in the eurozone.
Nichola James, Senior Economist

Economic Research,
Lloyds TSB Corporate
10 Gresham Street,
London EC2V 7AE
0207 626 - 1500

Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.



Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 23 July 2018
A 14:00 US- Existing Homes Sales
Tue 24 July 2018
AFlash PMIs
Wed 25 July 2018
A 08:00 DE- IFO Survey
A 14:00 US- New Homes Sales
A 14:30 US- EIA Crude
Thu 26 July 2018
AA 11:45 EZ- European Central Bank Decision
A 12:30 US- Weekly Jobless
A 12:30 US- Durable Goods
Fri 27 July 2018
AA 12:30 US- GDP
A 14:00 US- Final University of Michigan

John M. Bland, MBA
co-founding Partner,

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.

Request a TRIAL of Max's Forex Service.


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105