Friday, March 10, 2017

Following the substantial uptick in manufacturing output fuelled by sterling's depreciation at the end of last year, the January data indicate a month-on-month fall of some 0.9%. This has contributed to a month-on-month fall of 0.4% in total industrial output. Year-on-year, industrial output still shows a large rises, of some 3.2%.

The slowing of output in January leads to another major revision in my neural network forecast for this variable over the coming 24 months - illustrating again that forecasting in such volatile times is a hazardous activity. The latest forecast is shown below - and is clearly more consistent with forecasts produced over the course of most of last year than with the one produced last month.