Mixed UK data has little impact on Sterling

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UK industrial production rose yesterday by 0.3% in March whilst manufacturing output rose by 0.2% however, the figures were rather disappointing as the markets expected industrial production to be up 0.4%.

The National Institute of Economic and Social Research (NIESR) estimate of UK GDP suggests that output grew to 0.3% in the three months ending in April in comparison with 0.7% in the three months ending in March. According to the NIESR "weak growth is a continuation of the UK's relatively weak recovery" however there was no much impact on Sterling which held onto the previous days gains against the Euro.

In the Eurozone, industrial production fell 0.2% in March, disappointing against forecasts for 0.3%, although the February figure was revised up to +0.6%. 

There was good news in the US with retail sales rising 0.5% in April and upward revisions to the gains in March and February. The US initial jobless claims fell 44,000 to 434,000 in the week to 7 May. The Labor Department did note that there were increased claims in Alabama due to the tornados and storms but this did not affect the national numbers. 

Today's releases of GDP from Eurozone countries have already started to come in. The French Q1 GDP figure was very encouraging, with growth coming in at 1.0%, substantially above the 0.6% expected while the German Q1 GDP figure was equally impressive, coming in at 1.5%. The markets however are more likely to be interested in the performance of the periphery; Spain, Portugal and Greece, which come out later today. 

Depending on the news from the periphery it may heighten tensions amongst Eurozone countries, particularly the central bankers on the ECB's Governing Council. Weak growth in the periphery would argue strongly against further rate hikes, but such arguments may fall on deaf ears at the European Central Bank.

In the US focus will surround the April CPI and the preliminary University of Michigan consumer sentiment indicator for May. Have a good weekend.