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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 1 December in advance of its meeting on 6-7 December 2000. 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 growth in Q3 had been revised down from 0.7% to 0.6%. The contribution of net trade had been weaker than in the advance release, but investment had been revised up somewhat. Manufacturing output had risen by 0.1% in October, but excluding high-technology components, which rose by 3.2%, it had fallen by 0.5%. New orders for capital goods corrected for erratic components (ie, defence, aircraft and aircraft parts) had fallen by 0.5% in October and there had been a reduction in the level of unfilled orders. Consumer confidence had fallen in October, possibly influenced by further falls in equity prices, especially in the telecommunications and technology sectors. Retail sales had weakened, with an increase of 0.1% in October. The unemployment rate had remained at 3.9%, although there had been an increase in weekly new claims over the past two months, and growth in non-farm payrolls had continued to slow. A3 There had been some easing in spreads in investment-grade corporate bond markets. Within the high-yield corporate bond market spreads had continued to widen. But there was some evidence to suggest that the recent tightening in credit conditions had been largely due to sector or firm-specific factors. There had been further indications of tightening credit conditions from the Federal Reserve Senior Loan Officer Survey, which also pointed to a slowdown in loan demand. Commercial and industrial lending by commercial banks had declined by 0.1% in October. A4 In the euro area, quarterly GDP growth in Q3 had been 0.6% in Germany, 0.7% in France and 0.5% in Italy, suggesting that euro-area GDP growth might slow relative to Q2, when it had been 0.8%. Euro-area business confidence had fallen in November, but consumer confidence had been unchanged from the previous two months, following the sharp fall in September. While the IFO index for western Germa ny had fallen for the fifth consecutive month, there had been a small improvement in expected economic conditions. Consumption had been weak in Germany, France