Economy maintaining its momentum in Q4

The Office for National Statistics confirmed that GDP grew by 0.4% in Q3 and the economy appears to have maintained its recent momentum so far in the fourth quarter. Indeed, November’s Markit/CIPS activity surveys indicate that quarterly GDP is on course to grow by around 0.4% to 0.5%. Admittedly, the news from the labour market has been less positive, with employment posting a surprise 14,000 fall in the three months to September and pay growth still showing little sign of life. But with inflation likely to fall back next year, this should enable real earnings to recover. What’s more, surveys of investment intentions and export orders continue to paint a positive picture. As such, we think that there is scope for GDP growth to regain more pace next year, rather than slow as the consensus expects.