British Manufacturing Lower than Expected 2012.03.09

March 09, 2012 17:44

The Office for National Statistics Friday reported United Kingdom (UK) production dropped a seasonally adjusted 0.4% in January 2012 compared to December 2011. Additionally, compared to production in January the previous year production this past January lowered a seasonally adjusted 3.8%. The biggest increases for manufacturing were in transport equipment industries (including motor vehicles, semi-trailers, etc.) which rose 6.7% as well as machinery and equipment which increased 3.8%. Despite this, manufacturing dropped 0.4% in January 2012 compared to January in the previous year.

In another British report, output prices (factory gate) increased a monthly 0.6% in February 2012 compared to January 2012. This was two times the amount economists projected and the largest increase since April 2011. As well, the annual rate of inflation or output prices in the year to February 2012 rose 4.1% compared to a 4.0% increase in the year to January 2012. Input prices had moved up 2.1% in February and 7.3% in the year. The monthly increase was driven by a 5.8% jump in crude oil and gasoline prices. Gasoline prices had been affected by a colder European climate and risk of lower supply from Russia. 

 

Australia reported a drop in exports caused a trade deficit in January. This was the first deficit in 11 months. The data was worse than market expectations of a surplus of AUD 1.5 billion. The drop in iron ore and coal exports contributed to the biggest drop in exports in over three years. The Aussie Dollar weakened after the report was released.

The GBPAUD continued to edge towards the 200 period moving average line. Despite the weak trade report from Australia, we are Aussie bulls and expect the GBPAUD to fall further. If the support level at 1.4750 is broken, we expect the pair to target 1.4600. 

Eugene Ross, Analyst

Admiral Markets

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