ECONOMIC OUTLOOK

OIL prices stalled on Monday after a recent strong run propelled by concerns about tensions in the Middle East. Brent crude slipped 0.2% to $55.88 a barrel.

Consumer spending was also in the spotlight as the British Retail Consortium (BRC) reported that the UK’s high street saw the biggest drop in retail sales, excluding food, in nearly six years in the first quarter of 2017. Total sales inched up by just 0.1% in the JanuaryMarch period compared with the same three months of last year. This was the weakest growth since the three months to December 2008, the BRC said.

Meanwhile, the Office for National Statistics made no change to the UK’s annual inflation rate which stuck at 2.3% last month.

UK manufacturing growth slowed for the second month in a row in March, according to the Markit/CIPS manufacturing purchasing managers’ index (PMI). The PMI reading fell to 54.2 from 54.6 in February.

Construction growth also slowed. The PMI survey showed a particularly weak rise in residential building activity, although at 52.2 the sector as a whole still expanded (shown by any reading above 50).

However, the UK’s dominant services sector showed good growth, with the PMI reading at a three-month high of 55.0 in March, up from 53.3 in February. Survey respondents remained optimistic about the business outlook in the year ahead, with almost half of the panel forecasting growth.

New car sales in March were up 8.4% on the year in the “biggest month since records began”, according to the Society of Motor Manufacturers and Traders (SMMT). More than 562,000 new cars were registered.

On Wednesday, Gertan Vlieghe, an external member of the Bank of England’s Monetary Policy Committee, said that there was no need to raise interest rates soon as there were signs that households are cutting back on spending.

Annual house price growth fell to 3.8% in March, the lowest rate in almost four years, according to the Halifax. Three-monthly growth was just 0.1%, with the average property price now £219,755.

Industrial production, which accounts for 15% of the UK economy, contracted by 0.7% in February compared with January, according to the Office for National Statistics (ONS).

The majority of the decline was because of a fall in gas and electricity output.

Kate Davies, senior ONS statistician, said: “While manufacturing was broadly flat in February, unseasonably warm weather reduced gas and electricity use, pulling down overall production.”

The figures suggested the UK economy is slowing after a strong end to 2016.

Many economists are expecting slower growth this year as higher prices and low wage growth hit consumer spending.