3 December 2001, 09:04 OUTLOOK - UK economic data next week unlikely to influence BoE rate decision
LONDON (AFX) - UK economic figures this week are unlikely to
influence the latest interest rate decision on Wednesday, but will
provide a strong guide to how the economy is shaping up for the crucial
Christmas period.
The Bank of England's Monetary Policy Committee begins its latest
monthly meeting on Tuesday and is overwhelmingly expected to keep rates
on hold at 4 pct, following their 50 basis point reduction last month.
The only new data of any relevance they will be assessing is
Monday's manufacturing PMI data for November and the latest retail
sales figures from the British Retail Consortium.
The sector, which has been mired in recession for three quarters,
is unlikely to show any improvement, and the PMI data may, according to
Investec's Philip Shaw, be down on last month's 46.5 as the perception
of a moderation in household spending restrains production in the
consumer goods sector.
The BRC's November retail sales data is expected to be fairly
robust, even though official data and the Confederation of British
Industry's distributive trades survey suggested slowing activity in the
autumn.
The two main house price surveys are out next week and attention
will focus on whether October's fall was a one-off reaction to the Sept
11 attacks on the US or the start of a more sustained downturn. Most
economists expect the Nationwide survey on Tuesday and the Halifax
survey on Thursday to show declines of 0.5 pct in November.
On Wednesday, the focus of attention will be on the MPC decision
but the CIPS services PMI survey for November will also provide some
interest, given October's result was the worst result for five years.
An improvement from last month's 46.3 is widely expected.
"The key to November's survey will be whether the 50 bps cut in
official rates at the start of the month helped to dispel some of the
gloom or whether the negative trend continues uninterrupted," said
Investec's Philip Shaw.
On Thursday, October's manufacturing output and industrial
production figures are published. Economists are anticipating a small
bounce-back in the former of 0.4 pct month-on-month following the
massive decline in September.
"Despite this rise, the trend in production is still down as global
demand remains weak and the level of sterling remains high," said HSBC
economist John Butler. Year-on-year output is expected to be 3.5 pct
lower.
Meanwhile industrial production is also expected to rebound by
around 0.4 pct in October, which gives a year-on-year decline of 3.3
pct. However, the range of forecasts is wide with some economists
forecasting a monthly fall of as much as 0.9 pct while others expect it
to rise 0.2 pct.
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