mpc.theyserveforyou.com

mpc: 11 A44 Contacts had continued to report little recovery in construction output, following the weather-affected downturn experienced in earlier months. However, the Agents had stressed that underlying confidence and expectations regarding future construction activity had remained strong. In particular, many construction firms expected a strong pick-up in public sector demand, although there had been some caution regarding the exact timing of the spending. In addition, most Agencies had suggested that commercial and dwelling construction was also likely to strengthen. However, many contacts had suggested that the pick-up was not likely to be noticeable until the spring. A45 The Agents had reported that recent strong annual retail sales growth had been maintained into January. There had been reports that discounting in the seasonal sales had been less deep than last year, reflecting strong volumes. There had been widespread reports of a considerable improvement in year-on-year private new car sales in December and January. A46 Skill shortages had remained a major issue for many firms, although they had not intensified recently. There had been little sign of labour cost pressures intensifying in recent months. A47 Inflation in materials prices had eased in recent weeks as the effect of lower oil prices had fed through. There had been further reports that output price pressures were rising. In most cases, manufacturing output prices were now flat, although a number of contacts reported that price increases had been achieved.

VII

Market intelligence

A48 Interest rate expectations implied by short sterling futures contracts had fallen slightly over the month, largely in response to announcements of weaker-than-expected domestic GDP and retail sales data, as well as the release of the weak US GDP data for Q4. Partly offsetting these movements, however, rate expectations had increased following the announcements of a few stronger-than- expected surveys of domestic business conditions and some better-than- expected corporate profit announcements which had helped to increase UK and overseas equity