mpc.theyserveforyou.com

mpc: 4 mild weather for the time of year. Manufacturing production had also fallen and was now below its August level. When taken together with the net trade figures for Q4, this suggested that the internationally exposed sectors were coming under renewed pressure, reflecting in part the effects of sterling's appreciation against the euro. The fall in output was quite broadly based, with chemicals and engineering (which had contributed significantly to manufacturing output growth in 1999) declining in February. 13 Survey data were not entirely in line with this picture. The purchasing managers' index for manufacturing, produced by the Chartered Institute of Purchasing and Supply (CIPS), had risen slightly in March, and had last been below the neutral level of 50 in April, nearly a year ago; the output index was also higher, while new orders were little changed. In the Engineering Employers' Federation survey, the output balance remained at +9 in Q1, with new orders again little changed. Reports from the Bank's regional Agents had suggested a resumption in manufacturing growth in February. It was possible that in some sectors volumes were being maintained only through a further reduction in margins, and that there would be limits on how much further that process could go. 14 While any slowdown in parts of manufacturing might feed through into the rest of the economy, either directly or through its impact on consumer confidence, at present the services sector appeared to be buoyant. The CIPS services index for business activity had risen to 59.6 in March, its highest level since June 1997. The CIPS construction index also pointed to continuing growth in activity and new orders. 15 The picture for retail sales was mixed. In February volumes had fallen back from their unusually high January levels, but on a three-monthly basis growth was unchanged, at 1.8%. The CBI Distributive Trades Survey had shown quite a marked slowdown in the growth of retail sales volumes and orders placed in March, but expectations for April remained strong. The GfK consumer confidence index was sharply down in March. The evidence suggested that while household spending remained strong, it might no longer be accelerating, although real disposable incomes still seemed to be growing rapidly. But a slowdown in consumption growth was built into the central projection in the February Inflation Report, and it was too early to say whether this would materialise.