Data discrepancies make Bank hard to predict

By Christina Fincher

LONDON (Reuters) - When Bank of England policymakers meet this week to discuss whether to pump more money into the economy they will have to piece together some contradictory data.

Official figures show the economy shrank for a sixth consecutive quarter between July and September, making the current recession the longest since the Second World War.

Private surveys, on the other hand, suggest the economy has not just stabilised but is expanding. Retail sales are growing at their fastest rate since December 2007, consumer confidence is on the up and even manufacturing is expanding at its fastest pace in two years.

This dichotomy poses a headache for Bank watchers. They must not only make a judgement on the true state of the economy but also on which pieces of data the central bank is likely to prioritise.

Peter Westaway, chief European economist at Nomura, reckons a stampede to change forecasts following the shock contraction in UK third-quarter GDP is misplaced.

"I don't think the BoE will want to put too much weight on any one piece of data," said Westaway, who has just joined Nomura after 15 years at the central bank.

"It may well be a split decision and a close call, but overall I still think there is a strong enough case to pause."

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