The shock 0.4% further drop in GDP in the third quarter reflects falls of 0.7% and 0.2% in industrial and services output respectively. Industrial weakness had already been signalled by August production numbers but the services decline is a big surprise and at odds with recent stronger purchasing managers' survey results (although the coverage of this survey is narrower than that of the GDP figures).

August monthly figures for services output were also released today. The July / August average of this series, which feeds directly into the GDP numbers, was 0.05% below the second-quarter level. To generate a 0.2% quarterly decline, the Office for National Statistics must be assuming a significant output fall in September. This seems odd given the limited information available at this stage.

The chart plots quarterly GDP together with a monthly proxy based on industrial and services output. After recovering by 0.4% in June and July, monthly GDP is estimated to have slumped by 0.6% in August with a further 0.3% decline in September implied by the quarterly estimate.

Today's figures conflict with the MPC's assessment at its last meeting that "output in the third quarter was likely to be close to the central projection in the August Inflation Report" – this projection implied a 0.1% rise last quarter (taking account of a 0.2% upward revision to second quarter numbers). The Committee, however, is likely to be puzzled by the apparent inconsistency with survey evidence and the assumption of a further output fall in September.

November's meeting is shaping up to be a cliff-hanger, with GDP weakness offsetting other factors arguing for an increase in the MPC's inflation forecast, including recent higher-than-expected outturns, better global economic news, stronger asset and commodity prices and a fall in the exchange rate. The two-year-ahead projection based on unchanged policies was above the target at 2.17% in August so the MPC needs to conclude that inflation prospects have improved to justify extending asset-buying. This still looks a stretch, even after today's number.