Forward guidance will be laid to rest next week - EY ITEM Club

7 February 2014

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  • Exports still failing to perform as hoped
  • Demand from outside the EU boosted exports
  • But rising exports through 2014 should lift production

Andrew Goodwin, senior economic adviser to the EY ITEM Club, comments on today’s trade and IoP data:

On trade:

“While today’s numbers do suggest a positive contribution from net trade to GDP growth in Q4, the strength in export growth falls sharply below what the survey data has been hinting at. Hopes that growth would broaden out into exports have so far been largely disappointed.

“The pickup in trade with countries from outside the EU is encouraging and, with the recovery seemingly well-entrenched across the pond, we remain optimistic that export growth will strengthen throughout 2014. A steady recovery in the Eurozone will offer further support.”

On IoP:

“More significant than the downward revision to Q4 are the downgrades to earlier quarters – with manufacturing now estimated to have contracted by 0.5% in 2013. This represents a large change to the previous data and contrasts markedly with the business survey figures.

“Industrial production was still 13% below its pre-crisis peak in December, giving an idea of the scale of the challenges facing the sector. But as exports begin to pick up this year, the recovery in output should become more solidified.”