...Recent data on the UK has sent conflicting signals. On one hand, official output data has been very weak; manufacturing output fell by 0.9% in October and by a further 0.2% in November, while services output fell by 0.7% in October. This means that the economy is highly likely to have contracted in 2011Q4. However, survey data for December was stronger. All three of the PMI surveys improved sharply, the manufacturing and services surveys by almost two points and the construction survey by almost one. With each survey also reporting a stronger new orders pipeline, the situation appears to be stabilising, although confidence remained fragile with respondents citing enduring concerns about developments in the Eurozone. In our view we are likely to see a mild technical recession from 2011Q4-2012Q1....
