OUTLOOK UK data to reveal further weakening in housing market, consumer spending

LONDON (Thomson Financial) - UK data this week are expected to show a further deterioration in both the housing market and consumer spending, boosting the case for another quarter point interest rate from the Bank of England in February.
The week kicks off with the Confederation of British Industry s monthly survey on retail sales, followed by Bank of England lending data on Wednesday. Thursday will see the release of the closely-watched Nationwide house price survey and GfK s consumer confidence survey.
Finally, January s PMI index on manufacturing activity will be released on Friday.
TUESDAY, JANUARY 29
-The Confederation of British Industry s latest distributive sales survey is expected to give further evidence of waning consumer spending as consumers count the costs of spiraling petrol and food prices and rising utility bills.
The balance of retailers reporting a rise in sales is expected to drop to zero pct in January from +8 pct in December.
"It s possible that aggressive discounting means volumes sales wont be quite as weak, but this survey should continue to paint a picture of weakening spending," analysts at CSFB said.
WEDNESDAY, JANUARY 30
-Figures from the Bank of England data are expected to show a further deterioration in mortgage activity as the credit crunch takes its toll. Mortgage lending growth is forecast to drop to 7.6 bln stg in December from 7.8 bln in November, while mortgage approvals -- a key gauge of future demand -- fall to 80,000 from 83,000.
"We expect Bank of England mortgage approvals and lending data to provide yet further evidence that housing market activity is now being substantially undermined by both stretched affordability and tightening lending practices," said Howard Archer at Global Insight.
Unsecured lending, for example on credit cards, loans and overdrafts, is also set to stay subdued at 1.1 bln stg.
THURSDAY, JANUARY 31
-A key survey from the Nationwide is expected to show UK house prices fell for the third consecutive month in January.
House prices are forecast to have fallen by 0.3 pct after a 0.5 pct drop in December. This would take annual house price growth down to 4.1 pct from 4.8.
-The GfK s latest survey is set to show consumer confidence waning as the headline index drops to -15 in January from -14 in December.
"The index has fallen very sharply in recent months and while there are some grounds for expecting a bounce (December s interest rate cut, solid employment growth), the momentum is in the other direction and we doubt we have yet reached the low-point," analysts at RBS said.
FRIDAY, FEBRUARY 1
-The purchasing managers survey for manufacturing is expected to reveal a further slowdown in activity in the sector, with the headline index forecast to fall to 52.5 in January from 52.9 in December.
This, however, will still leave it above the 50 level which marks expansion.
"The December rate cut may have helped to alleviate some strains in the credit markets and sterling s ongoing slide will have boosted competitiveness, but the softening in global demand and the general deterioration in sentiment are likely to prove more powerful forces at this juncture," RBS analysts said. jessica.mortimer@thomson.com jkm/lam COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News. MMMM