CONSUMERS scaled back their personal borrowing in April giving further ammunition to the doves on the Bank of England Monetary Policy Committee, which meets today and tomorrow to decide if interest rates, held at 7.25% since November, should be changed.
A Reuters poll of independent economists found 21 thought the Bank would leave rates unchanged against two who expected an increase.
Yesterday's figures from the Bank of England showed consumer credit rose by #888m in April, the smallest monthly increase since September when retail trade was hit by the death and funeral of Diana, Princess of Wales.
The April figure represented a sharp downturn from March's #1403m and it was also lower than the #1030m lent to consumers in April last year.
Retail sales rose by just 0.1% in April and car registrations were also weak. Analysts thought that if these recovered in May, consumer credit would rise.
Dharshini David, UK economist at HSBC Securities, said: ''Despite the fall in net lending this month, it would be premature to think that consumers' appetite for credit is waning, especially as the underlying trend in lending remains solid.''
Credit card lending held up well at #380m against #407m in March, but other specialist lending, which covers hire purchase, fell away sharply from a robust #484m in March to #122m.
There was more good news for the construction industry, where activity increased for the fourteenth month in succession, according to the Chartered Institute of Purchasing and Supply.
The monthly construction index produced a buoyant reading of 57.6 in May, though for the third month running it slowed down.
The institute explained: ''The latest survey shows activity levels to have risen strongly again in May, but companies also reported continuing problems finding
suitable workers, good sub-contractors, and sufficient supplies of materials.''
A further decline in the availability of suitable sub-contractors fed through to another rise in the average rates charged, while the perceived quality of sub-contractors was said to have fallen.
''Optimism regarding future business activity remained very buoyant in May with well over half of companies surveyed expecting business to pick up over the next 12 months,'' the institute added.
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