UK Production And GDP Estimate, US NFIB

The outlook for the UK’s economic rebound will receive a fresh round of analysis with today’s scheduled updates on industrial production and a GDP estimate from the National Institute of Economic and Social Research. Meanwhile in the US, the National Federation of Independent Business today publishes its estimate of small business confidence for June.

UK Industrial Production (08:30 GMT): Business confidence in June climbed to its highest point in more than a year in Britain, according to yesterday’s monthly update of the BDO Optimism Index. That’s a clue for thinking that industrial production will post another gain in today’s news on output in Britain for May.

One consensus forecast sees a slightly stronger rate of growth for the monthly comparison: an advance of 0.2 percent in May versus a 0.1 advance earlier. We already know that the mood is brightening in this corner of the British economy. The UK CIPS/PMI Manufacturing Index climbed to a 25-month high in last week’s June report. A similarly buoyant trend is unfolding in the services sector, or so the latest PMI number shows. The question is whether there’s convincing support for the improving outlook in the hard data. The news is still mixed on this question, albeit with some positive signs.

The Economist warns that Britain’s rebound of late is unbalanced and so growth is “unsustainable.” Corporate investment in particular remains sluggish, largely because lending to firms is still low after tumbling in the wake of the last financial crisis. But is this a reason to stay pessimistic on the prospects for the macro outlook generally? Today’s industrial production news will provide fresh guidance on the answer.

US NFIB Small Business Optimism Index (11:30 GMT); Last week’s news that the growth of payrolls for small companies accelerated for the second month in a row raises hope that the long-awaited employment revival in this critical corner of the US economy has finally arrived. Yes, we’ve been here before, only to be disappointed. But the NFIB’s Index of Small Business Optimism appears to be anticipating a genuine turn for the better and so today’s update on the mood among small firm owners will be closely watched for assessing the trend.

Small companies historically have provided most of the jobs in the US and so growth here is necessary if the economy is to deliver something more than a modest rate of expansion for the rest of the year. Is that likely? Maybe, or so one could reason by noting that the trend has finally become friendly for the NFIB Index, which climbed in May to the second-highest level since the Great Recession started in December 2007, advises the National Federation of Independent Business. Analysts think we’ll see this benchmark inch higher in today’s June release. If so, the odds for expecting better days ahead for payrolls in the small company segment will brighten as well.

UK NIESR GDP Estimate (14:00 GMT): Another source of optimism for the British economy is the rising trend of GDP projections published by the National Institute of Economic and Social Research (NIESR). Although last month’s estimate of output for the three months through May slipped a bit from the previous number, the generally improving tide of numbers in 2013 is still conspicuous.

In last month’s forecast, NIESR says that “our estimates suggest that both the production and private services sectors provided significant positive contributions to GDP growth in the recent three month period.” Today’s update will be valuable for deciding if the recent improvement in Britain’s big-picture profile has momentum for the second half of the year. For a clue on what to expect from NIESR, look to the industrial production report, which is scheduled for release several hours ahead of the NIESR data.