Encouraging start to the fourth quarter

Global growth appears to have accelerated in October, as suggested by the rise in business surveys to their highest levels since early 2011.  After accelerating in Q3, the US economy seems to have largely shrugged off October's fiscal crisis. Activity has also strengthened further in both Japan and the UK, and it may have picked up in emerging economies, albeit from a low base. The main exception is the euro-zone, where the improvement in sentiment tailed off in October with growth still weak and uneven. Today's 25bp rate cut by the ECB will have little impact. In contrast to the business surveys, labour market news has been disappointing. Significant data revisions mean it now looks like unemployment in the single currency area has not yet peaked, while rapid growth in the US has not generated as many jobs as hoped.