Our regular roundup of the key economic indicators
In its latest World Economic Outlook, the IMF downgraded its forecasts for global growth in both 2015 (to 3.1%, from 3.3% in July) and 2016 (to 3.6%, from 3.8%) and stressed that downside risks to the outlook have risen. In particular, further commodity price falls would weigh on the outlook for commodity exporters and emerging markets also remain vulnerable to further dollar appreciation and a sharper-than-expected slowdown in China. The Fund highlighted that medium-term prospects for advanced economies overall remain subdued, due to low investment, unfavourable demographics and weak productivity growth.
The Office for National Statistics (ONS) recently released large-scale revisions to national accounts data, which suggested a stronger recovery in the UK over the recent past: GDP is now estimated to be somewhat higher than its pre-crisis peak (5.9%), than in the previous data vintage (5.2%).
Survey data suggest that UK growth may have slowed somewhat in Q3: the composite Purchasing Managers’ Index (PMI) fell back over Q3 as a whole (to 55.3), to its lowest since mid-2013 (albeit still well above the 50 “no change” mark). On its own, this points to GDP growth in the range of around 0.5%, from the 0.7% rise in Q2. However, this contrasts somewhat with the CBI’s growth indicator, which has maintained steady momentum over the third quarter (albeit slowing in September alone).
Recent ONS data suggests that industrial production alone is likely to have made a positive contribution to growth in Q3: production rose by 1.0% in August, driven by a 8.7% surge in the relatively small and volatile Oil & Gas Extraction sector (in seasonally adjusted terms), which the ONS said was due to a low level of summer maintenance shutdowns this year. But despite August’s rise, manufacturing is likely to decline over the quarter as a whole, underlining the sector’s weak contribution to the recovery.
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