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UK economy returned to growth in November

UK economy returned to growth in November
Emma Lunn
Written By:
Emma Lunn
Posted:
12/01/2024
Updated:
12/01/2024

Monthly GDP is estimated to have grown by 0.3% in November 2023, following an unrevised fall of 0.3% in October 2023, according to the Office for National Statistics (ONS).

The data showed retail was a major contributor to growth in the UK economy, due to Christmas shopping and Black Friday sales.

Real gross domestic product (GDP) is estimated to have fallen by 0.2% in the three months to November 2023, compared with the three months to August 2023. So, overall, the data suggests a period of flatlining growth.

Services output grew by 0.4% in November 2023 and was the main contributor to the monthly growth in GDP; this follows a fall of 0.1% in October 2023.

Production output grew by 0.3% in November 2023, following a fall of 1.3% in October. The construction sector fell by 0.2% in November 2023 after a fall of 0.4% in October 2023.

Output in consumer-facing services grew by 0.6% in November 2023, and remains 5.8% below pre-pandemic levels (February 2020), while all other services were 7.5% above. The largest positive contribution in November 2023 came from retail trade, except for motor vehicles and motorcycles, which grew by 1.3%.

The latest figures from the ONS provide data for November 2023 and include revisions from January 2022 to September 2023.

‘Most households won’t really care if UK economy is growing or not’

Danni Hewson, head of financial analysis at AJ Bell, said: “When we are talking about such small moves on either side of the line most households won’t really care if the economy is growing or not, but psychologically avoiding a technical recession matters.

“November’s surprisingly robust GDP figures could suggest that falling inflation is finally having an impact on people’s sense of wellbeing, but in reality it seems many were simply tempted by Black Friday sales which in turn boosted retailers, couriers and warehouse operators.

“The bigger question is whether the momentum continued through the final days of 2023 and we won’t find out the answer to that for another month, but the odds look pretty evenly stacked. 

“Whilst people were happy to spend when a bargain was to be had, ongoing concerns about the cost of living is tempering our consumption and it’s notable that whilst people were buying stuff they were having to cut back elsewhere.”

‘Economic hokey cokey’

Nicholas Hyett, investment analyst at Wealth Club, said: “The UK continues its economic hokey cokey in November, with 0.3% growth in GDP following a 0.3% fall in October. 

“With weakness in travel and hospitality, there is evidence that the cost-of-living crisis continues to squeeze consumers. But, high tech service industries seem to be picking up the slack, and even manufacturing is showing some signs of life, with its first positive growth since June 2023. It’s an economic muddle, albeit with some promising signs.

“The lack of a clear economic narrative will make things challenging for the Bank of England, which has the unenviable job of bringing inflation under control while, ideally, not crushing the economy under the burden of interest rates that are too high. While we think it’s unlikely that there’s strong reasons to hike rates from here, rate cuts look unlikely as the UK moves away from recession, at least in the short term.”