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mpc: 3 year-on-year, had been more stable. There were tentative signs in the activity data that pressures in the housing market might be easing, perhaps reflecting tighter monetary conditions. The number of particulars delivered had fallen in December by about 2½%, and the figure for November had been revised down slightly. The volume of transactions was basically flat. The number of loan approvals had fallen slightly at the end of 1999, having previously been stable since the summer. While the Committee assumed in its best collective projection that there would most probably be some moderation in house price inflation over the coming year or so, it was likely to remain quite high. This would tend to support continuing robust consumption growth, with some members seeing upside risks.

Demand and output

9 As already noted, the underlying determinants and forward-looking indicators of consumption had strengthened. For example, consumer confidence, as measured by the GfK index, had risen by a further 6 points in January to +8, its highest level since autumn 1997. Although new car purchases had recently been relatively weak, it seemed probable that this reflected a pause while prospective purchasers waited for the results of the Competition Commission inquiry into the car market. 10 Reports from the Bank's regional Agents suggested that the apparent weakness in business investment in the second half of 1999 might in part be explained by firms having delayed spending with an IT component until the millennium-date change was safely out of the way. If so, any deferred expenditure would tend to support near-term investment growth, as in the view of some Committee members would the possibility of firms stepping up investment related to e-commerce. Tighter monetary conditions and the higher exchange rate would, on the other hand, tend to reduce investment spending. Overall, the Committee concluded that the most likely outlook for investment was slightly weaker than in November, but with some members seeing upside risks. 11 The outlook for net trade was important to the Committee's judgment about the balance of pressures on the economy's productive capacity and, therefore, the prospects for inflation. Export growth had picked up during 1999 with the recovery in world economic activity; Q3 had been unusually strong. Imports had also increased during 1999. Since the November Report, however, the trade figures had been weaker and the outlook had changed because of the further appreciation in sterling's exchange rate. It now seemed likely that the contribution of net trade to output growth would be more negative than earlier expected. This had three consequences. First, it would help to offset the effects on GDP growth of the prospective sustained strength of final domestic demand, and so contribute to containing near-term pressures on capacity. Second, it would mean that the imbalances in