Weakness in Russia could weigh on UK Industrial Production data in June - TD Securities

FXStreet (Łódź) - Annette Beacher, Head of Asia-Pacific Research at TD Securities believes that the already released, weak manufacturing data in Russia, Poland, Estonia, and Lithuania could point to a similar outcome in the UK.

Key quotes

"Nearly every major European country saw a steep decline in IP in May (-1.6% M/M for EU manufacturing), so the big question is how much of a recovery we might see in June."

"Consensus is looking for a 0.6% gain for both headline IP and manufacturing production, and the ONS pencilled in a 0.4% increase in IP for June in its Q2 GDP estimate."

"We see downside risks though stemming from the weakness in Russia and how far that might spread. For the European countries that have reported so far for June, we’ve seen weak manufacturing data in Russia, Poland, Estonia, and Lithuania."

"The UK manufacturing sector does not have as tight of a relationship to Russia as some of these other countries, but Russian and Polish IP are significant variables in helping to predict what happens in the UK."

"So from there we see downside risks and look for something closer to a flat outcome for UK June manufacturing production, supporting the story of a decelerating UK economy."