Howard Archer Sector Quotations

Robust service sector activity in February makes it even more of a cast-iron certainty that the Bank of England will keep interest rates unchanged next Thursday.

The sector may see modest expansion in the first quarter of 2006, having been a major drag on overall growth in the fourth quarter.

December survey evidence showing robust service sector activity, stronger retail sales and firmer house prices has temporarily at least alleviated some concern over the economy's softness and eased pressure on the MPC for an imminent cut in interest rates.

This is still a pretty healthy report overall that suggests that the service sector has started 2006 relatively strongly. The report does little to change perceptions that the Bank of England will keep interest rates unchanged next week, and very probably for some time to come after then.

The evidence of marked improvement in the manufacturing sector further guarantees there will be no interest rate cut this Thursday. Indeed, we admit it is looking increasingly questionable whether interest rates will be trimmed further.