Activity is benefiting from August's interest rate cut, increasing confidence in the housing market and still rising employment. This is likely to put a floor under house prices. |
All the indications are that the ECB remains inclined to tighten monetary policy further over the coming months to contain inflationary risks. |
Below the headline data there are some positive features that should not be overlooked. |
Consumer confidence held up relatively well in February, following January's sharp bounce. |
Consumer confidence is faltering anew, which does not bode well for spending in the near term at least. |
Consumer credit growth was again relatively muted in September, pointing to continuing consumer caution, |
December survey evidence showing robust service sector activity, stronger retail sales and firmer house prices has temporarily at least alleviated some concern over the economy's softness and eased pressure on the MPC for an imminent cut in interest rates. |
Euro region labor markets are finally beginning to see genuine, if somewhat limited, improvement, boosted by the pickup in growth since mid-2005. Rising employment is key to boosting consumer spending across the euro region. |
Flat export orders in February are particularly disappointing. |
Following the higher-than-expected headline producer price inflation data for January... (Tuesday's data) is welcome reassurance that strong competitive pressures through the supply chain are still limiting the pass-through effects of high oil and energy prices. |
For now at least, the Bank of England will be very wary that a trimming of interest rates could excessively stimulate the housing market and risk sending house prices markedly higher. It certainly further rules out a move today. |
Future growth still depends critically on developments in consumer spending, and we suspect that this will be relatively muted over the coming months. |
Going forward, UK exporters will be fervently hoping that recent signs of improving growth in Western Europe will be sustained and will increasingly feed through to boost exports, |
Going forward, UK exporters will be fervently hoping that recent signs of improving growth in Western Europe will be sustained and will increasingly feed through to boost exports. |
Healthy mortgage lending data show that housing market activity extended its recent firmer performance in December. This is also borne out by the latest survey evidence consistently showing increased buyer interest. |