Friday, 1 February 2008

Manufacturing is on the decline, but so what? The housing market is crashing

The recession seems close at hand, at least for UK manufacturing. The Chartered Institute of Purchasing and Supply said their index of manufacturing activity fell from 52.4 in December to 50.6 in January. A number below 50 would mean activity was contracting.

However, will the manufacturing slowdown be enough to convince the MPC to cut rates? In the past, UK manufacturing has only ever been a marginal concern, and it will not be any different during the next MPC meeting. It will be declining housing prices that will ensure that rates will come down.

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