Are rate cuts coming this year?
The UK economy returned to growth in November, with gross domestic product (GDP) rising by 0.3% after a 0.3% fall in the previous month, figures from the Office for National Statistics (ONS) have shown.
Despite this recovery, GDP still fell by 0.2% over the three months to the end of November.
The rebound in monthly gross domestic product (GDP) was driven by 0.4% growth in services output, following a fall of 0.1% in October. Production output also grew by 0.3% after a drop of 1.3%.
Meanwhile, the construction sector fell by 0.2% in November after a 0.4% dip in the prior month.
GDP fell 0.2% in the three months to November 2023.
— Office for National Statistics (ONS) (@ONS) January 12, 2024
Services was flat (0.0%), while production was down 1.5% and construction down 0.6%
➡️ https://t.co/WFpvckBAE7 pic.twitter.com/pZZvrHf5x7
“GDP bounced back in the month of November, led by services with retails, car leasing and computer games companies all having a buoyant month,” Grant Fitzner, chief economist at the Office for National Statistics, commented on the latest GDP figures. “The longer-term picture remains one of an economy that has shown little growth over the last year.
“The economy contracted a little over the three months to November, with widespread falls across manufacturing industries, which were partially offset by increases in public services, which saw less impact from strike action.”
Nicholas Hyett, investment analyst at Wealth Club, said the latest ONS figures on the economy show an “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,” Hyett added.
“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.”
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