The survey evidence released so far paints a pretty downbeat picture for growth at the start of the year. Indeed, falls in the manufacturing, construction and services sector PMI left the all-sector index consistent, on the basis of past form, with quarterly GDP growth of just 0.3%, down from Q4’s 0.5% and suggesting that the economy lost the momentum it appeared to gain at the end of last year. However, we would caution against reading too much into any one month’s reading. Note that the future activity index of the services survey picked up sharply. And with inflation set to drop back this year as the impact of the fall in the pound fades, that should pave the way for a rebound in consumer services, while the manufacturing sector should continue to benefit from a strong global economy. As a result, we expect the weakness in activity surveys to be a temporary blip rather than the beginning of a downward trend.
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