UK: Dismal industrial production and large trade deficit numbers - BBH

UK reported worse than expected December industrial production figures (-1.3% on the month and flat for the year), and a considerably largest than expected trade deficit, notes the research team at BBH.  

Key Quotes

“That said, there were two bright spots in today's data.  First, manufacturing output fared better, rising an as expected 0.3% in the month of December (though the November gain was halved to 0.2%), and construction output jumped 1.6%, while the market was looking for a small decline.  The November series gain was cut to 0.1% from 0.4%.  The overall trade deficit was twice what the market expected at GBP4.9 bln and the November shortfall was revised to GBP3.65 bln from GBP2.80 bln.”

“Still, the data is mostly old news and instead the hawkishness of the Bank of England shown yesterday is still very much the buzz.  MPC's Broadbent, who is thought to be among the candidates to replace Carney as Governor next year, emphasized the shifting views of the labor market as key.  The strength of the global economy was also cited as a key to the BOE's outlook.  Looking at the OIS, it appears the market is discounting a nearly 2/3 chance of a hike in May, up from a little more than a 1/3 chance at the end of January.”