NIESR Expects BoE to Hike in November

Daily Analysis - 11/05/2016

Research Institute Sees Interest Rates at 1.50% by End of 2017

The National Institute of Economic and Social Research gave a bullish outlook in its economic report on the prospects for the UK economy. The institute noted that the BoE could hike rates as early as November 2016 should the UK vote to stay in the EU - and expects rate hikes to continue into 2017, ending at 1.50%.

French, German Industrial Production Slips in March

Industrial production in France fell unexpectedly in March, declining -0.30%, according to data from statistics agency Insee on Tuesday. Weaker output in manufacturing, transport and food were the main drags on the metric. The decline fell below analyst expectations of a 0.50% increase. February's industrial production numbers were also revised lower to 1.00% from 1.30%. The same statistic in Germany was also weaker, falling -1.30% and extending declines of -0.50% from February. On a year over year basis, German industrial production grew at a pace of 0.30%, slowing from the 1.30% witnessed in February.

Bank of France Expects Slow Q2

The Bank of France published its quarterly report yesterday where it noted that after a strong start to the first quarter, economic growth was likely to stall in the second. The bank forecasts that GDP growth in Q2 could slow to 0.30%, after rising 0.50% in the first quarter. Services and industry will continue to be the driving force as businesses remain optimistic on a stronger growth. The French government meanwhile projected a 1.50% annualized GDP growth this year. Meanwhile in Germany, economic data showed stronger than expected trade surplus numbers in March - leading economists to believe that Germany's Q1 GDP could rise 2.50% annually. Destatis will be publishing German Q1 GDP estimates this Friday.

UK Trade Deficit Widens in Q1

The UK's trade deficit widened to levels unseen since the beginning of the financial crisis in the first quarter of 2016. Widening to 13.27 billion pounds in the first three months of the year, the deficit is up from 12.20 billion pounds since the fourth quarter of 2015, illustrating worries over a potential Brexit. Industrial and manufacturing production data will be released later today, and is estimated to have increased to 0.70% and 0.40% respectively, following declines in both statistics in the prior month.

Norway Core Inflation Climbs 3.20% in April

Core inflation in Norway for the month of April came in at 3.20% on a year over year basis, compared to 3.30% in March and 0.10% below consensus estimates. On a monthly basis, real inflation increased only 0.10%, rising at the same pace as last month and below estimates of a 0.20% increase. Food prices increased 0.30% but airfares fell 0.20%. The latest inflation data is unlikely to dent policy when the Norges bank meets on Thursday - as current inflation is only 0.10% below the bank's forecasts.