All three purchasing managers’ surveys followed a similar pattern in September: down slightly on August’s very high levels but still very strong. The latest, for services, had an index reading of 60.3, and completed the strongest quarter since Q2 1997.
The construction PMI, 58.9 after 59.1 in August, included the strongest rise in housebuilding since November 2003. Manufacturing, 56.7 after 57.1, grew at its best since early 2011, Overall, the surveys point to quarterly GDP growth of more than 1% for Q3, though it remains to be seen whether that is endorsed by the Office for National Statistics.
According to Chris Williamson, Chief Economist at survey compilers Markit:
“Businesses in the vast service sector reported an ongoing growth spurt in September, expanding at a rate just shy of August‟s recent high. The buoyant data follow similar upbeat surveys of the manufacturing and construction sectors, and collectively the surveys suggest the economy will have expanded by as much as 1.2% in the third quarter; its fastest growth rate since the pre-crisis days of 2007.
“Growth is being led by financial services (linked in part to increased housing market activity) and the business sector. Consumer-facing services continue to struggle, reflecting the ongoing squeeze on incomes due to weak pay growth and high inflation.
“There are encouraging signs that the strong pace of expansion will persist in the coming months: September saw one of the largest inflows of new business ever seen by the services survey, business confidence about the year ahead picked up again and other surveys have shown the mood among households to have also improved.
“Not surprisingly, employers are taking on more staff to meet growing demand, which should help bring unemployment down.” The surveys can be accessed here.
This piece is cross-posted from EconomicsUK.com with permission.