The latest PMI data suggests stability; UK services increased from 51.8 to 52.4 while manufacturing and construction registered marginal gains, up slightly to 48.3 and 47.2 respectively. The weighted average of indices suggests flat GDP growth for Q1 13.
Inflation is also stable, if elevated, with CPI and RPI at 2.8% and 3.2% respectively. The March UK budget offered little short-term fiscal stimulus and the MPC also left policy on hold in its April meeting suggesting no significant changes are likely until Mark Carney assumes the bank governorship in July. Look for additional support for the Funding for Lending Scheme as well as forward guidance on interest rate policy.
Meanwhile, Eurozone PMIs are not improving and conditions in France appear to be deteriorating, although equity markets are still buoyant with the FTSE 100 only down 3% to 6300 from a five-year high in mid-March of near 6500.
Economic fundamentals are stable, if non-expansionary; the March Budget has few new growth initiatives; UK economic hopes are linked to new monetary policy innovations.