Services turnover numbers for September suggest that output in the industries covered rose significantly from August, in turn raising the possibility that the official estimate of GDP growth in the third quarter will be raised from 0.5% to 0.6% – revised data will be released on 25 November. (Caveat: translating the turnover data into a forecast for output is not straightforward – see previous post.)

The current estimate of 0.5% GDP growth assumes that services output rose by 0.2% in September. The turnover survey covers nearly 60% of the sector and suggests an increase of at least 0.5% for this group. Unless output in the rest of the sector – dominated by government activities – fell, the 0.2% official growth assumption looks too low. A rise of 0.4% would probably be sufficient to trigger an upward revision to third-quarter growth.

Such an increase would also imply that the September level of GDP was 0.2% above the third-quarter average, implying solid growth “carry-over” into the fourth quarter. The 1.9% October rise in retail sales reported yesterday, meanwhile, will contribute +0.1 of a percentage point to the change in GDP in that month. Current evidence, therefore, appears consistent with GDP growth remaining at around 0.5% in the fourth quarter – contrary to the consensus forecast of a slowdown.