No change in UK rates

The Bank of England's monetary policy committee has left interest rates unchanged at 6% for the seventh month in a row.

Thursday's decision was in line with analysts' expectations, given growing evidence of a slow-down in the housing and retail markets and mixed signs of recovery in manufacturing.

The nine-member MPC, which is charged with acting to control inflation, started its monthly interest rate policy meeting on Wednesday.

UK interest rates are a half-point below those in the US but still above the 4.5% level seen in the eurozone, where rates were increased last week to combat the threat of inflation posed by the rise in oil prices.

Conflicting signals

The MPC, which was only narrowly in favour of holding rates steady at its August meeting, was faced with a range of conflicting data on the state of the UK economy.

Manufacturing as measured by future plans is showing modest growth, according to last week's Purchasing Managers Index.

Yet factory output is in decline, down 0.3% in July, figures released on Wednesday revealed, the same day textiles giant Coats Viyella announced 1,900 job cuts.

The services sector, meanwhile, is still showing strong growth, with 60% of firms expecting further growth, according to a survey released by the Chartered Institute of Purchasing and Supply on Tuesday.

The housing market has cooled significantly in recent months and the British Retail Consortium's latest survey suggests prices on the high street are very sluggish.

Little inflationary pressure

While unemployment figures are at a 25-year low, competition among firms to fill vacancies has yet to feed through to wage inflation.

And although sterling is still strong against the euro, it has declined against the dollar in recent weeks.

Martin Temple, head of the Engineering Employers' Federation, said: "The MPC is clearly aware of the continued pressure facing exporters from the strong pound.

"While there is little it can do about the weakness of the euro, it is striking an effective balance in the absence of major inflationary pressure."