BoE will maintain a wait-and-see stance at its Super Thursday - Natixis

Natixis Economic Research team says strong GDP figure couple with rapidly rising inflation would mean the Bank of England (BOE) will maintain a wait-and-see stance at its Super Thursday meeting next week. 

Key quotes

GDP growth in Q3 (0.5% q/q, 2.3% y/y) was driven by the ongoing robust expansion in UK’s dominant services sector

The services sector was extremely robust rising by 0.8% q/q and contributing 0.64pps to quarterly GDP

UK manufactures reported improved external demand in the PMI survey thanks to significant weakening of Sterling. Yet, a large share of exports is denominated in foreign currency, which along with rising import prices (that in turn are increasingly feeding through to exported output prices) seem to have undermined the manufacturing activity in the volume terms.

All in all, domestic demand, in particular private consumption, was the main driver of growth. Yet, the outlook of rapidly accelerating inflation (likely at around 3% next year) suggests restrained purchasing power, which along with subdued employment and pay prospects, are set to dampen household spending.