Summary
Investment goods Investment goods output again surged (by 2.0%) in the second quarter of 201 0, to stand 8.6% above its year-ago level.\n Credit Crunch Watch Financial stress indicator * The financial stress indicator is a composite index of a number of indicators including risk spreads, mortgage spreads, equity volatility, commercial paper and commercial loans outstanding and the spread of LIBOR rates over T- bill rates (the "Ted" spread). The rise in stress was at least in part due to continued investor concerns about the 'peripheral' Eurozone countries - bad news in Ireland and Portugal saw bond spreads in both countries widen further this week, Monetary conditions indicator * The monetary conditions indicator is a composite index based on the Fed funds rate, the 10-year bond yield, the yield curve slope and the effective or trade-weighted dollar exchange rate, Monetary conditions this week were broadly unchanged, with a flatter yield curve offset by lower 1 0-year bond yields and a weaker trade-weighted dollar.
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Extract
Manufacturing Continues to Drive the Recovery
Highlights
* Ignoring the construction data, over which there are concerns about data quality, the manufacturing sector continued to lead the way in Q2. We expect this pattern to continue over the coming year, with the investment goods sector expected to be the star performer.* It was a quiet week for UK data releases with mixed results from public sector net borrowing. While increasing this August compared to a year earlier, it went down for the financial year to date when compared with the same period last year.In Q2, manufacturing output rose for the third successive quarter, increasing by 1 .6% quarte r-on-quarter to stand 3.8% higher than a year earlier. Output of both investment and intermediate goods has picked up strongly, partly reflecting the fact that these firms were hit hardest in the recession but also their exposure to the turnaround in ...See the full content of this document
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