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mpc: 2 slowdown in domestic demand. Consumption growth had also slowed, to 0.7% in Q4 from 1.1% in Q3. There had been some evidence of de-stocking. The large fall in the National Association of Purchasing Managers Index in January had been largely accounted for by falls in the production and new orders components; the employment measure had fallen by less. Manufacturing output had fallen by 0.3% in Q4, the first quarterly decline since 1991. The data for US manufacturing employment had suggested that so far most of the reduction in labour input had taken place in hours worked rather than in employment. Non-farm payrolls had risen by 268,000 in January, following a (downwardly revised) increase of 19,000 in December. Construction and public sector workers had accounted for most of the increase. Labour productivity on an hourly basis in the non-farm business sector had risen by 0.6% in Q4, following a 0.7% increase in Q3. ICT production growth had slowed in December to 1.3% month on month, but had remained healthy compared to other manufacturing. Motor vehicle production in particular had seen large falls (-6.8% quarter on quarter in Q4). Capital goods orders (excluding erratics) fell 3.0% month on month in December. Consumer confidence had fallen sharply in January, although both the Michigan and Conference Board measures had remained above 1990/91 levels. The expectations component of the Conference Board measure had seen the largest one month fall since October 1990. Weekly indicators had suggested that US retail sales had recovered in January. Average hourly earnings growth had slowed in January to 3.9% year on year from 4.3% in December. A6 Euro area industrial production had risen by 4.4% year-on-year in November from 3.8% in October. Euro area retail sales had risen by 1.2% year-on-year in November. The euro area purchasing managers survey had declined slightly, but remained at a high level. Euro area consumer confidence had fallen by 1 point in January after the strong rebound in December. Euro area industrial confidence had fallen 3 points compared to November. Japanese industrial production had risen by 1.5% month-on-month in December. Forward-looking indicators of investment had remained reasonably robust and machinery orders had risen by 13% year on year. Japanese import volumes had remained relatively strong, particularly for high-tech industrial equipment. However, external demand had declined and export volumes had risen by 1.4% year on year in December.