Key events
Here Michael Hewson, chief market analyst at CMC Markets UK, on UK GDP data in about 10 minutes…
This morning we got the latest November GDP figures for the UK economy, which are expected to indicate that the UK economy is already in a modest recession. With the economy contracting in the third quarter, it is very likely that we could see further contraction in the fourth quarter.
Monthly GDP in October increased by 0.5%, although on a current three-month basis the economy shrank by -0.3%. This current quarterly figure is not expected to change in this morning’s numbers for November with another figure of -0.3%, while the monthly figure is expected to fall by -0.2%.
All sectors of the economy are forecast to show contraction in November, with manufacturing and industrial production expected to slow by -0.2%, construction output by -0.3% and the services index by -0.1%.
This may be why the pound has underperformed in recent days, as markets feel the Bank of England doesn’t have as much room to raise rates given how fragile the UK economy appears, with the Federal Reserve and European Central Bank seen as having more room to the head.
Introduction: The UK GDP report for November is coming
Good morning and welcome to our continuing coverage of business, financial markets and the world economy.
We’re about to find out how well or badly the UK economy did in November as recession looms.
The Office for National Statistics is due to release its monthly estimate of GDP for November at 7am. Economists forecast the UK economy to contract by around 0.2% in November, after better-than-expected growth of 0.5% in October.
A fall in GDP in November would not officially put the UK in a technical recession – defined as a contraction in two consecutive quarters – but it could signal that one is close.
UK GDP fell in the third quarter of 2022, by 0.3%, so a reduction in the October-December quarter would mean a recession (we’ll have Q4 data in a month).
Rising energy prices have hit the economy, weakening consumer spending as the cost-of-living crisis has left consumers with less to spend.
Alvin Tan from RBC Capital Markets told clients:
We expect GDP to decrease again in November.
Retail sales are a good guide to the pattern of activity recently, falling 0.4% m/m in November.
Investment bank analysts Nomura also predicted a month-on-month decrease in November, saying:
“Considering the weaker polls and higher inflation, we think GDP is falling due to the weaker polls and therefore forecast a 0.3 percent month-on-month decline in November.”
British housebuilders warned this week that demand had slowed last autumn, amid turmoil following the mini-budget.
Daily agenda
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7am GMT: UK GDP report for November
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7am GMT: UK trade report for November
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9am GMT: Full-year GDP growth report for Germany
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10:00 GMT: Eurozone trade balance for November
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15:00 GMT: University of Michigan US Consumer Sentiment Index