Heading for a weak Q4

Following the solid rise in GDP in the third quarter, the recent news has been disappointing. The business surveys suggest that output barely increased at all in November. And following a brief period of resilience, the news on household spending has weakened considerably over the last month. Admittedly, it is not too surprising that we have now reached the point where the Brexit shenanigans are weighing more heavily on activity. Nonetheless, we suspect that the surveys are overstating the slowdown in growth. Indeed, after the EU referendum, the all-sector PMI pointed to a quarterly contraction of nearly 0.4%. In fact, GDP rose by 0.5% in Q3 2016.  As such, we still think that the economy will grow by 0.3% or so in Q4, and by 1.3% for 2018 as a whole.