Consumer demand for household goods, including furniture, rose in value by 6% between the three months to November 2002 and a year earlier, according to official estimates, while high street sales overall rose by 4.8%. In volume terms, adjusted for seasonal variations, total sales were also up by 4.8% annually, while volume sales by household goods outlets increased by 4.4%.

But two business surveys carried out in December signal that the long-expected slowdown in consumer spending may have arrived. Sales in the first three weeks of December were static for the first time in 10 years, says the CBI, while orders placed on suppliers were flat. In contrast, demand for furniture was among the strongest growing retail sectors, with a balance of 43% of outlets reporting year-on-year volume growth – up from just 8% in November. But DIY sales were slower than a year before, as 27% of businesses reported weaker volumes than in December 2001.

The British Retail Consortium survey, which covers the whole of December, indicates that underlying volume growth slowed to 2.5%, down from 3.1% in November. But the figures confirm that furniture sales picked up and that kitchens sold well during the month.

It is too early to conclude definitely that the spending boom is over, since the Christmas trading period is often volatile. But Bank of England figures confirm that consumers lost their appetite for borrowing as the year drew to a close. Credit grew by £1.4bn (or 0.9%) in November, seasonally adjusted, £0.4bn less than the rise on October and the smallest increase for 14 months. This took the three-month annualised growth rate down to 14.4%, from 16.6% in October.

Growth in new mortgage lending dropped to £7.4bn in November – down 7% on the previous month. However, the number of new home loans agreed in November was 121,000, compared with an average of 118,000 in the three months to October, and there is scant evidence of any overall slowdown in the housing market.

Figures for new home starts in the three months to November indicate a 3% rise over the same time a year before, although private sector starts increased by only 2%, to 44,200. Meanwhile total completions rose by 6% over the year, to 44,000.

The index of housebuilding activity published by the Chartered Institute of Purchasing and Supply fell to 59.9 in December, down from 62.3 the previous month but still well above the critical no-change level of 50.0. The index of overall construction industry activity declined to 55.0, suggesting that the pace of expansion was slightly weaker than the seven-month high recorded in November.

Results of the latest half-yearly survey of the commercial property market by the CBI and property advisers GVA Grimley show that demand rose in the second half of 2002. A balance of 13% of companies increased their holding during the period, an improvement on the 9% in the first half. Looking ahead, only 5% pointed to more modest growth in demand during the first half of 2003.

In manufacturing, activity contracted in December for the first time since July, according to the purchasing managers, as new orders, work backlogs, employment, and quantities of purchases all fell. Further signs of tough times facing manufacturers come with new figures from National Statistics, which reveal that profitability in the third quarter dropped to 6.8% from 7.6%, while business investment fell by 10.6% annually.

Consumer confidence in Britain, which is a closely watched indicator of future business activity, and which reflects perceptions of the outlook for earnings and employment, suffered its sharpest fall in more than two years during December. The measure, provided for the European Commission by Martin Hamblin GfK, plunged to levels not seen since immediately after September 11.

Certainly the slowdown in consumer spending could turn out to be the soft landing for which the Bank of England and the government have forecast and hoped.