Is the economy losing momentum?

This week’s PMI surveys were undeniably disappointing and have led some to question whether this is the start of a more pronounced slowdown. However, there are two reasons why we think that concerns about a further slowdown may be overdone. First, we wouldn’t read too much into the PMI surveys, since they have a history of bouncing about quite a lot from one month to the next. What’s more, the different surveys have not been painting a wholly consistent picture. Second, the broader news on the economy doesn’t suggest that a substantial slowdown is likely. Consumers have been showing an impressive resilience in the face of the real pay squeeze. And there are signs that other parts of the economy will start to play a bigger role in supporting growth. Overall, we still expect GDP to grow by 2% or so in 2018.