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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