Daily Economic Outlook: 27th October, 2015

In advance of Wednesday's FOMC meeting and Thursday's Q3 GDP data, US durable goods orders for September will provide an update on US manufacturing. Recent statistics have suggested that activity in this area, which is much more exposed to international demand than other parts of the economy, has slowed sharply.

Weakness in September orders will probably in part reflect a decline in the volatile aerospace sector but core orders are also expected to remain weak. Shipments data, to be published concurrently, will allow economists to fine tune their expectations for Thursday's GDP outturn.

Today's first estimate of U.K. third quarter GDP growth will provide a useful reality check on the extent of the recent slowdown in economic growth. PMI data point to a fairly sharp deceleration in UK growth over recent months.

However, as official data have not slowed to anywhere near the same extent, an initial estimate of Q3 growth of 0.6% is expected, only just below the Q2 rate of 0.7% and still above most economists' estimates of the sustainable rate of GDP growth, states Lloyds Bank. 

In particular, in contrast to the PMI surveys, official estimates to date for the service sector show no slowdown in Q3. The gains in that sector is expected, which accounts for more than 75% of UK output, will more than offset a likely fall in construction activity and deceleration in industrial production, added  Lloyds Bank.