Separate figures yesterday showed that retail sales volumes in June were flat.
However, minutes of the 7 June meeting between Kenneth Clarke, Chancellor of the Exchequer, and Eddie George, Governor of the Bank of England, revealed yesterday that the mounting evidence of weaker growth had not closed the rift between the two men. For the second month Mr George advised a rise in base rates despite mixed economic signals and Mr Clarke turned it down.
The Governor grudgingly accepted that the Chancellor's decision not to raise rates in May had gone down well with the financial markets. But he said there was a puzzle about the strength of the economy due to uncertainties over the official manufacturing data.
"In these circumstances the Bank could only repeat their advice of last month, that monetary policy needed to be tightened sooner rather than later," Mr George said.
City economists concluded that with the latest statistics going the Chancellor's way, base rates are unlikely to go up in the near future. Mr Clarke said yesterday that he had deliberately slowed growth to achieve steady growth combined with low inflation.
The unemployment claimant count fell by 4,200 in June, the 22nd monthly decline but the smallest since January 1994. Joblessness in the three months March to May rose by 28,000, according to the Labour Force Survey count, the more reliable measure of underlying unemployment trends.
Male unemployment fell by 10,000 but female unemployment rose by 39,000 due to a combination of job losses and more women looking for jobs.
Simon Briscoe, UK economist at Nikko Europe, said: "A rise in unemployment is the clearest signal we could get about the weakness of the economy."
Separate figures showed the volume of retail sales was flat last month.
Their annual growth rate has slowed from 4 per cent a year ago to just over 1 per cent last month - when the total volume of sales was the same as it had been in December.
Non-food sales have declined in the latest three months, although within the total clothing and footwear sales have increased while sales of household goods and other non-food items have fallen.
Sales by food retailers and mixed retailers were higher.Reuse content