UK Economy Contracts In November
The UK economy contracted in November ahead of the general
election, due to the weakness in services and industrial output,
data from the Office for National Statistics showed Monday.
Gross domestic product dropped 0.3 percent month-on-month after
rising 0.1 percent each in September and October. Economists had
forecast GDP to remain flat.
In the three months to November, the economy grew 0.1 percent
sequentially, after rising by a revised 0.2 percent in the three
months to October.
Overall, the economy grew slightly in the latest three months,
with growth in construction pulled back by weakening services and
another lacklustre performance from manufacturing, ONS Head of GDP
Rob Kent-Smith said.
Long term, the economy continues to slow, with growth compared
with the same time last year at its lowest since the spring of
2012, Kent-Smith added.
Services output dropped unexpectedly by 0.3 percent in November,
offsetting October's 0.3 percent increase. This was the biggest
fall since 2018. Output was forecast to grow 0.1 percent.
In November, industrial production declined 1.2 percent
month-on-month after easing 0.4 percent in October. Manufacturing
logged a monthly fall of 1.7 percent due to large falls in car
production as plants shut their operations ahead of October 31
Industrial output was forecast to remain flat and manufacturing
to fall 0.1 percent in November.
On a yearly basis, industrial production was down 1.6 percent in
November, faster than the 0.6 percent decrease a month ago.
Likewise, the decline in manufacturing output deepened to 2 percent
from 0.3 percent.
Construction output increased 1.9 percent from the previous
month in November, in contrast to a 2.2 percent decline in October.
This was the fastest monthly growth since January 2019. On a yearly
basis, construction output slid 2 percent.
Another report from the ONS showed that the visible trade
deficit narrowed sharply to GBP 5.26 billion from GBP 10.94 billion
Consequently, the total trade balance showed a surplus of GBP
4.03 billion versus GBP 1.33 billion deficit seen in October. The
surplus was driven by a GBP 3 billion increase in exports of
The economy is on course to stagnate or contract by 0.1 percent
sequentially in the fourth quarter as a whole, Andrew Wishart at
Capital Economics said. At the margin, that makes an interest rate
cut a bit more likely, the economist added.
More Bank of England policymakers started to support a rate cut
as the economy showed signs of weakness.
"Personally, I think it's been a close call, therefore it
doesn't take much data to swing it one way or the other," Gertjan
Vlieghe told the Financial Times in an interview published over the
"I really need to see an imminent and significant improvement in
the UK data to justify waiting a little bit longer."
BoE's outgoing chief Mark Carney last week said the central bank
has enough room to cut interest rates by a total 250 basis points
as well as to increase the size of its asset purchases.
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