The decline in the ISM manufacturing index to a two-year low of 51.1 in August, from 52.7 in July, reflects the ongoing impact of the dollar’s rapid appreciation and softening global demand. Nevertheless, the much bigger non-manufacturing sector continues to perform well and, consequently, we expect GDP growth to be 2.5% annualised in the third quarter. As an illustration, the annual growth rate of construction spending hit a nine-year high of 13.2% in July.
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