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ANNEX: SUMMARY OF DATA PRESENTED BY BANK STAFF

A1 This Annex summarises the analysis presented by Bank staff to the Monetary Policy Committee on 29 October, in advance of its meeting on 3-4 November 1999. At the start of the Committee meeting itself, members were made aware of information that had subsequently become available, and that information is included in this Annex.

I The international environment

A2 US GDP had risen by 1.2% in Q3, according to the provisional estimate. Consumption and investment had remained strong, while inventories had made a positive contribution to GDP growth, following a negative contribution in Q2. Net exports had continued to fall in Q3, albeit by less than in Q2. Definitional and statistical changes to the National Accounts had raised the average annual GDP growth rate by 0.4 percentage points between 1992 and 1998. The National Association of Purchasing Managers' (NAPM) Index had fallen slightly in September, but had remained at a level consistent with an expansion of manufacturing output. A3 The quarterly growth in the Employment Cost Index measure of labour costs had declined slightly in Q3. Annual producer price inflation had increased to 3.1% in September, and annual consumer price inflation to 2.6%. A4 GDP growth in the euro area had been revised up to 0.5% in Q2. Both consumption and investment growth had been revised up. Industrial production had risen by 2.5% in the year to August, reflecting improving business confidence, particularly in France. M3 had risen by 6.1% in the year to September. Private sector credit growth had been higher. Annual inflation had remained unchanged in September, at 1.2%. Excluding energy, food, alcohol and tobacco, inflation had continued to fall. A5 Despite a decline in September, industrial production in Japan had risen by 3.8% in Q3. However, the September Tankan survey indicated that companies were continuing to cut fixed investment. Volumes of imports and exports had continued to strengthen, particularly to other Asian countries. Consumption indicators had been mixed and retail sales growth had remained negative. Base money had risen by 6.1% in the year to September, but broad measures of money growth had been lower. Survey evidence had suggested that banks were becoming more willing to lend, but the stock of outstanding loans (adjusting for write-offs and securitisations) had continued to fall. The rate of