I am always cautious about relying on PMI surveys, as they can give misleading readings, as we saw immediately after the EU vote. However, many other forecasters like them and use them. It will be interesting to see if they follow their logic through. Those who revised forecasts down sharply after the vote because the initial PMI figures were weak should presumably be revising them up substantially now they are strong. Today’s Services PMI came out at 54.5 for October compared to 52.6 for September. The overall whole economy PMI hit 54.6, up from 53.8 in September. These figures have to be below 50 to forecast a downturn.
I am sticking with my forecast of 2% growth this year, in line with the Treasury forecast in March. It is also difficult to see why many forecasters are still so pessimistic about 2017.