UK GDP growth slowing in Q3

The first estimate of Q3 growth will be the usual output estimate. The news from the high frequency data is that industrial production will make a very modest positive contribution to growth but that construction will be a drag of nearly 0.2pp. The latest construction output data showed output plunging by over 4% mom in August and if it just holds at that level in September would be down 2.6% on the quarter. 

As usual, the crucial factor will be the service sector. The services PMI points to a marked loss of momentum in the sector as the third quarter progressed so growth in services output is expected to have no more than matched the Q2 performance of 0.6% qoq, although the strong Q3 retail sales performance brings a small risk of an increase. 

This implies that GDP growth should fall from 0.7% qoq in Q2 to 0.5% in Q3.