THE ECONOMIC recovery is showing signs of a healthier balance after data on Monday suggested some of the heat is coming out of the housing market while manufacturing remains strong.
Mortgage approvals fell to a nine-month low in April, the Bank of England said, suggesting new measures to control mortgage lending were leaving their mark.
A separate survey showed that growth in the manufacturing sector dipped only slightly in May and was still robust.
“The UK’s economic rebound looks an awful lot healthier after today’s data, with more evidence that this is no credit-fuelled bubble,” said Rob Wood, an economist at Berenberg bank.
But with business investment still lagging, Britain may struggle to move away from consumer-led growth any time soon.
The surprisingly fast economic revival since last year has been driven largely by consumer spending and an upturn in the housing market, underpinned by record low interest rates.
Policymakers have long wanted to see a stronger contribution from manufacturing and business investment and the Bank of England has sounded increasingly concerned in recent weeks about the risk of the housing market overheating.
The BoE data showed lenders approved 62,918 mortgages in April, the fewest since last July and 17 per cent below a six-year high in January. It was the third consecutive monthly slowdown.
At the same time, the Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) inched down in May to 57.0, but stayed far above the 50 line that divides growth from contraction.
New orders piled in at a healthy rate and manufacturers took on more staff, albeit at a slightly slower pace than in April.
“Sustaining the rebound and continuing to push towards rebalancing the UK economy towards manufacturing remains critical.
“On those scores the latest survey provides some real positives,” said Rob Dobson, senior economist at Markit.
The survey pointed to subdued price pressures, with factory output prices rising at the slowest rate since last August, and input prices slipping for a fourth consecutive month.