While it will probably be confirmed later this week that the economy didn’t grow at all in Q2, July’s PMIs provide some support to our view that GDP will rise in Q3. Admittedly, both the manufacturing and construction PMIs remained close to their respective six- and ten-year lows recorded in June. But at least they didn’t fall further in July. And the services PMI, which is the better barometer of domestic demand, has edged up to a nine-month high. (See Chart 1.) Of course, whether or not this proves to be a genuine turning point depends on what happens with Brexit on 31st October. And with Boris Johnson as Prime Minister, the chances of a no deal Brexit seem to be rising by the day.
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