Minutes of the Monetary Policy Committee meeting11 Oct 2023 07:54
..... ending on 20 September 2023 after the last meeting.
The international economy
UK-weighted global GDP was estimated to have increased by 0.5% in 2023 Q2, broadly in line with the August Monetary Policy Report projection. Global GDP growth of 0.3% was expected for Q3, also in line with the August Report, but with some differences across regions.
Euro-area GDP had increased by 0.1% in 2023 Q2 but was expected to contract in Q3, weaker than expected in the August Report. Manufacturing and services output PMIs had both entered contractionary territory, with weakness in German manufacturing output particularly pronounced.
In the United States, GDP had increased by 0.5% in 2023 Q2, and growth was expected to increase further in Q3, stronger than projected in the August Report for both quarters. In contrast to developments in the euro area, the manufacturing output PMI had stopped contracting and the services output PMI had remained in expansionary territory.
The Committee discussed some possible factors behind the recent relative strength of US activity. Real incomes had increased more strongly in the United States, uplifted partly by significant fiscal policy actions during the pandemic and a smaller deterioration in the terms of trade, whereas government support in Europe had abated as energy prices had fallen back. US households had also appeared relatively more willing to spend any excess savings, possibly due to higher consumer confidence.
Growth appeared to have slowed in China, with the NBS manufacturing PMI having remained below the neutral 50 level since April. Consumption and industrial production growth were similarly weak, alongside softer investment and falling exports. There had been notable headwinds from the property sector, with property prices falling and a major developer narrowly avoiding technical default. Taken together, these indicators pointed to Chinese growth slowing further in 2023 Q3, weaker than had been expected in the August Report.
Footnote: there was a brief discussion about the doomsters and the doubters that appear regularly on chat boards. The committee concluded that there was no evidence for their ravings. Especially from such dubious sources as the IMF and particularly the BBC. 😋
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