Manufacturing and mortgage data point to more balanced recovery

Mortgage approvals fell to a nine-month low in April, the Bank of England said, suggesting new measures to control mortgage lending were leaving their mark.

A separate survey showed that growth in the manufacturing sector dipped only slightly in May and was still robust.

“The UK’s economic rebound looks an awful lot healthier after today’s data, with more evidence that this is no credit-fuelled bubble,” said Rob Wood, an economist at Berenberg bank.

But with business investment still lagging, Britain may struggle to move away from consumer-led growth any time soon.

The surprisingly fast economic revival since last year has been driven largely by consumer spending and an upturn in the housing market, underpinned by record low interest rates.

Policymakers have long wanted to see a stronger contribution from manufacturing and business investment and the Bank of England has sounded increasingly concerned in recent weeks about the risk of the housing market overheating.

“Sustaining the rebound and continuing to push towards rebalancing the UK economy towards manufacturing remains critical. On those scores the latest survey provides some real positives,” said Rob Dobson, an economist at Markit.