Slowdown in growth may be less severe than analysts feared

THE FOG of uncertainty obscuring the outlook for the economy thickened yesterday with better-than-expected trade figures, a survey showing a mixed picture in manufacturing and news of a pick-up in the housing market. The latest batch of evidence suggested growth might be slowing less sharply than some analysts have been braced for.

City experts were uncharacteristically vague about how the Bank of England's Monetary Policy Committee would vote on interest rates next week. "The three members who voted to raise rates in January and February will not have changed their minds. The question is whether another two will have joined them," said Ciarn Barr, an economist at Deutsche Morgan Grenfell.

The split vote on the MPC in the latest two months demonstrated how close a call the interest rate decision has been. The Bank's Inflation Report said the inflation outlook depends on whether overseas trade slows the economy enough to offset strong pay and price pressures at home.

The shortfall between exports and imports of goods narrowed unexpectedly in the latest month. Official figures show trade with countries outside the EU was pounds 777m in the red in January, down from just over pounds 1bn the previous month, while the whole world deficit narrowed from pounds 1.6bn to pounds 1.3bn in December.

However, the unexpected improvement could not disguise the worsening trend in trade, with the deficit jumping to more than pounds 4bn in the final quarter of 1997. The underlying growth of export volumes slowed to a still- robust 7.3 per cent in the fourth quarter but was overtaken by import growth of 9.3 per cent.

Against this disappointing background, the Confederation of British Industry reported an improvement in orders this month. Its survey of industrial trends for February showed domestic orders up although export orders remained weak.

Sudhir Junankar, a CBI economist, said: "Exports are still being hit by the strength of sterling." But he added, "The manufacturing picture is not totally bleak."

Further evidence that the economy remains buoyant at home emerged from the Nationwide's house price index, which increased by 0.7 per cent in February to a level 12.9 per cent higher than a year earlier. The building society said the average house price, at pounds 62,770, has regained its 1989 peak.

Outlook, this page

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Sport
A referee issues a red card
football
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
News
in picturesWounded and mangy husky puppy rescued from dump
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'