Sterling faces a further test of strength

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The Independent Online
THE POUND will also have to negotiate a raft of official statistics this week that are unlikely to demonstrate signs of economic recovery.

Factory output figures for July, due on Thursday, are forecast to show that manufacturing production was flat in the month and 1.5 per cent lower than in 1991.

On the same day the Department of Employment is expected to report a further rise of 25,000 in the number of people out of work and claiming benefit last month following the 29,000 rise in unemployment in July.

The gloomy tone of last week's CBI survey of retail sales suggests that the market's forecast that high street spending volume rose by 0.2 per cent in August may prove over-optimistic. Official figures are due on Wednesday.

Meanwhile Patrick Foley, chief economic adviser to Lloyds Bank, warns today that there are no imminent signs of recovery in consumer spending or house prices.

Writing in the latest edition of the bank's economic bulletin, Mr Foley says that the financial position of the personal sector is as bad as, and in some respects worse than, it was prior to the recession, with money available for spending having fallen by some pounds 100bn from pre-recession levels.

Spending would not recover, he added, until consumers feel confident enough to take on more debt.

The prudent approach from consumers is borne out by a regional survey from Infolink, the credit information organisation, suggesting that consumers are more concerned about keeping up existing payments than taking on new debts. More than nine in ten consumer credit agreements are up to date, with only 4 per cent in serious arrears.

(Photograph omitted)

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