Mortgage, retail sales data cast doubt over economy
By Andy Bruce and David Milliken
LONDON (Reuters) - British mortgage approvals fell for the first time in four months and retail sales growth softened, casting a shade of uncertainty over hopes that the economy will regain momentum in the final months of the year.
Thursday's batch of data is unlikely to put Bank of England policymakers under fresh pressure to raise interest rates soon, especially after news this week that the economy slowed more than expected in the third quarter.
Britain was the fastest growing of the biggest developed economies last year and there is scant sign that its recovery is at risk of fizzling out. But business surveys suggest the pace of expansion has started to moderate recently.
The number of mortgages approved by lenders dipped to 68,874 in September from 70,664 in August, the Bank of England said, below all forecasts in a Reuters poll.
But total lending rose in September at the fastest rate since 2008, reflecting a rise in mortgage approvals in recent months and recent buoyant morale among Britain's big-spending consumers.
There were signs that mood could fade towards the turn of the year. In a separate survey, the Confederation of British Industry (CBI) said retail sales grew at the slowest rate in six months in October after a big increase in September.
And British consumer confidence slipped to its lowest level since the end of 2013, the European Commission said.
"The UK is doing alright, alarm bells are not ringing. But my point is throughout this year, we've had sub-trend GDP growth every quarter, if you exclude oil and gas," said RBS economist Ross Walker, who does not expect a rate hike until around August next year.
"Whatever your timeframe was for monetary tightening at the start of the year, it can't now be more urgent than it was then."
The Bank of England's policymakers meet next week but are not expected to raise rates until the second quarter of 2016, according to the median forecast in the most recent Reuters poll of economists.
Most investors expect the BoE will wait for the U.S. Federal Reserve to move first. The Fed left rates unchanged on Wednesday but opened the door to an increase in borrowing costs in December by making a direct reference to its next meeting.
As a result, British government bond prices fell sharply on Thursday. They extended losses after new U.S. data showed solid domestic demand in the world's biggest economy that analysts said could keep the Fed on track for a December rate hike, even though overall growth was weaker than expected.
There were more signs that steady British economic growth and a recent recovery in wage growth are pushing up house prices more strongly.
Mortgage lender Nationwide said house prices rose by a stronger-than-expected 0.6 percent in October compared with a 0.5 percent increase in September.
A lack of homes coming onto the market is expected to continue pushing house prices higher.
A National House Building Council report on Thursday showed registrations for new homes -- which take place before building starts -- suffered their first annual fall during the third quarter since early 2013.
(Editing by Gareth Jones)
