UK economy narrowly returns to growth in November

The UK economy narrowly returned to growth in November as real gross domestic product (GDP) increased 0.1%, largely because of a growth in services.

The increase comes after two consecutive months of decline, however, real GDP is estimated to have shown no growth in the three months to November 2024, compared with the three months to August 2024.

In the month, services output is estimated to have grown by 0.1% in November 2024, after falling by 0.1% in October 2024.

The largest positive contribution in the services sector in November 2024 came from the accommodation and food service activities subsector where output rose by 2.0% in the month, following a fall of 1.2% in October 2024. Both food and beverage service activities, and accommodation grew in November 2024, by 1.6% and 3.0%, respectively.

There was also a growth of 0.5% in wholesale and retail trade; repair of motor vehicles and motorcycles in November 2024, driven by increased output of 1.0% in wholesale trade, except of motor vehicles and motorcycles.

The largest negative contribution in November 2024 came from administrative and support service activities, which fell by 1.2%. This was mainly driven by falls in rental and leasing activities (down 2.4%), services to buildings and landscape activities (down 3.0%) and office administration, office support and other business support activities (down 1.3%).

Meanwhile, Output in consumer-facing services increased by 0.5% in November 2024, following a revised fall of 0.4% in October 2024.

Food and beverage service activities were the largest contributor to the increase at the industry level, with output growing by 1.6%, followed by other personal service activities, where output increased by 2.5%, and accommodation, which grew by 3.0%. There was a fall of 2.7% in sports activities and amusement and recreation activities in November 2024, which was the largest negative contributor to consumer-facing services in the month.

Commenting on the figures, Isaac Stell, investment manager at Wealth Club said: “The UK economy spluttered back to life in November with growth of 0.1%, following two months of negative growth in September and October. The small amount of growth achieved in November will likely take further heat off a chancellor that has been under significant amounts of pressure over the last few weeks.

“Services output, the engine room of UK economic growth grew by 0.1%, Construction output grew by 0.4% and Production output declined by 0.4%.”

He added: “The latest figures will be welcomed by the Government, however small they are, and when coupled with yesterday’s inflation undershoot provide a small glimmer of hope. However, Reeves and co will not want to hang out the bunting just yet as challenges certainly remain in the form of upside surprises to inflation and businesses having to shoulder significant rises in national insurance contributions come April. However, with an economy that is far from firing on all cylinders, and inflation, for the moment moderating, much needed rate cuts from the Bank of England look like a real possibility.”