The survey evidence suggests that the economy has maintained its momentum in Q3 thus far. The improvement in the Markit/CIPS services survey in August came as a bit of a relief after the recent run of poor economic data. The increase in the services PMI was enough to offset falls in the equivalent manufacturing and construction indices, leaving the all-sector PMI pointing to growth of 0.4% q/q, in line with Q2’s rate. Manufacturing enjoyed a strong patch in 2017 thanks to robust external demand following the pounds post-referendum fall. Indeed, the last time manufacturing growth outperformed services came after the previous sharp depreciation in sterling in 2008. But the fall in the manufacturing PMI fell back below that of the services sector in August suggests that the boost to the export-orientated manufacturing sector from the pound’s fall is now behind us.
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