Week in Review - 28th January, 2011

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↓ GDP (2010q4, preliminary)UK GDP contracted by 0.5% in the final quarter of 2010, according to provisional statistics. This was considerably worse than consensus forecasts, which predicted 0.5% growth. Most of the contraction was caused by weaknesses in the service and construction sectors, with manufacturing growing by 1.4%.
↔ Index of servicesOutput from the service sector was unchanged between October and November. However, year on year, output for November 2010 rose 1.5% compared with November 2009, with all components experiencing some growth.
↓ Public Sector FinancesPublic sector net debt (excluding financial interventions) was £889.1 billion (equivalent to 59.3% of GDP) at the end of December 2010. This compares with £743.5 billion (52.2% GDP) at the end of December 2009.
↔ MPC minutes The MPC minutes noted that “for most members, recent developments implied that the risks to inflation in the medium term had probably shifted upwards." Despite voting to maintain policy, the balance of votes moved towards an increase in interest rates, with Martin Weale joining Andrew Sentance in favour of an increase in the Bank Rate. Adam Posen once again voted to increase QE.
↓ GfK/NOP Consumer ConfidenceGfK NOP's Consumer Confidence Index dropped eight points to -29 in January, the lowest level in 22 months. January saw decreases across all five sub-indices; with the "major purchase” index, dropping 21 points.
The week ahead
Tue 1st: Manufacturing PMI; Lending to Individuals
Wed 2nd: REC report on jobs

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