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mpc: 3 eventually recovered to its former level, then the underlying picture for consumption would havebeen stronger (and inventories weaker) than recorded. The change in seasonal pattern following thechange to new car registration practice last year also made comparisons difficult. 9 Overall the latest indicators of demand and output gave a rather mixed picture, with someremaining strong and others weakening. Many of the strong indicators pointed to continuingbuoyancy of domestic demand. In particular, real earnings growth had been strong and wealthcontinued to rise. The GfK consumer confidence index had fallen on the month, but this was asexpected following its surge in January and the index remained close to the level it had been atthroughout 1999. The latest CBI Distributive Trades survey pointed to both a strong outturn forFebruary and an expectation of a strong March. However, the Bank's regional Agents had detecteda mixed retailing picture in February. In aggregate, retail sales growth had continued at broadly thesame pace, but with some regions reporting stronger and others weaker growth. 10 A number of indicators on the output side showed perhaps greater signs of a slowdown in therate of growth, many reflecting the recent weakness in net trade. Industrial production had beenweak in January and there had been small downward revisions to earlier quarters. The CharteredInstitute of Purchasing and Supply (CIPS) manufacturing activity index had fallen slightly inFebruary and had therefore remained well below its level in Q4 ­ though it remained above theneutral 50 level. The OECD leading indicator for the UK had also turned lower. It was possiblethat the recent weakness in some of the output indicators might slow income growth and, in turn,domestic demand. By way of contrast with weaker industrial production data, the latest CIPSservices and construction indices had continued to show strong growth and the 3i survey had shownbusiness optimism to be strong.

Money and asset prices

11 Broad money was growing at the slowest annual rate of growth since July 1983, when themonthly figures had first been published. In addition, the disaggregated data indicated that thismonth, unlike in recent months, Other Financial Corporations could not account for the reduction inthe aggregate M4 growth rate. It was possible that some of the weakness in household andcorporate deposits was accounted for by the unusual seasonal timing of tax payments which mightprove temporary, and it would therefore be useful to see another month's data before drawing anyconclusions. The large financial deficit of the corporate sector was another possible contributingfactor. 12 By contrast growth in lending remained strong. Household credit growth, in particular, wasbreaking records, with annual growth at 10% the highest since the early 1990s. In the housing