The first survey to take the pulse of manufacturing industry in December revealed a mixed state of health, with a pick-up in output and signs of bottlenecks combined with a slowdown in growth of new orders to the lowest since May 1996.
The manufacturing expansion entered its 19th successive month, according to the overall activity index reported by the Chartered Institute of Purchasing and Supply. But it declined to 52.9 from 53.7 in November, pointing to slower growth.
"It isn't the conclusive signal either one way or the other that the markets would like. It is not very robust but neither does it give any support for the theory the economy is heading for recession," said Kevin Gardiner, an economist at Morgan Stanley.
Separately, Halifax reported a small decline in house prices in December, taking its measure of house price inflation sharply lower to 4.3 per cent from 6.1 per cent. This was the lowest rate since June 1996. Halifax insisted this did not mark the end of the housing market recovery. It is predicting a 5 per cent price increase this year.
The contrast between its measure and the alternative from Nationwide, the building society, has grown steadily wider during recent months, with the latter reporting the annual increase in house prices at 12.6 per cent in December. However, both lenders agree that the housing market has weakened.
Most commentators likewise agree that the pace of growth in the economy as a whole is on the verge of a slowdown. But even after yesterday's purchasing managers' survey, the financial futures market still indicated that the Bank of England is expected to raise interest rates by another quarter point notch to 7.5 per cent before the end of March.
"A lot of things could happen in January that make it premature to say interest rates are already at their peak," said David Walton at Goldman Sachs.
Official figures for retail sales, cutting through the conflicting anecdotes from retailers, and for GDP in the final quarter of 1997, are expected to have most influence on the Bank's Monetary Policy Committee. But these will not be available until after its meeting tomorrow and Thursday, making next month the most likely time for any further rate rise.
The signals in the survey were too mixed to be decisive. Output grew faster, and export orders also increased at a faster pace than the previous month.
What's more, the companies surveyed reported that their suppliers were taking longer to make deliveries, a clear sign that industry is hitting supply bottlenecks. This was particularly marked in the consumer goods industries.
Yet, at the same time, the pace of increase in total order books dipped, the latest in a series of hints that domestic demand is weakening. Manufacturers also said the strong pound was keeping the price of their materials down, and they were continuing to have to cut costs.
"Certainly, the short-run outlook is subdued," said Kevin Darlington at Hoare Govett. But all in all, there was nothing in yesterday's figures to confirm forecasts of either a hard landing or a soft one for the economy.