Although a slight uptick in activity was expected, the August data turned out to be even better than anticipated. Fiscal support shored up investment but the real bright spot was a healthy pick-up in consumer spending, suggesting that households may be turning slightly less cautious. With property price falls accelerating again, negative wealth effects could yet derail this rebound. But assuming that policy support continues to be stepped up and isn’t prematurely withdrawn, we think a modest cyclical recovery in growth may now be underway.
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