UK economic growth slows to 0.1% in November – business live

Key events

A drop in Covid-19 vaccinations weighed on UK economic growth in November.

The ONS reports that NHS Test and Trace and COVID-19 vaccination programme activity fell by 63% in November 2022, following increases in September and October.

This was driven by a fall in vaccine activity as the autumn booster programme slowed down. It began in early September.

Overall, NHS Test and Trace and the COVID-19 vaccination programme contributed an estimated negative 0.2 percentage points to monthly GDP growth, the ONS explains.

Economist Mohamed El-Erian, chief economic adviser at financial services giant Allianz, tweets there are three key messages from the UK GDP report.

Namely, growth was higher than expected; the services sector is driving it; and the jobs market looks relatively tight:

The surprising rise in GDP in November suggests that the economy is proving more resilient than many had feared, says Suren Thiru, economics director at ICAEW (the Institute of Chartered Accountants in England and Wales):

But, Thiru fears November’s growth will only delay the recession, saying:

A strong boost to consumer activity from the World Cup helped lift overall activity.

The positive November outturn delays rather than diminishes the prospect of recession with soaring inflation, higher unemployment, rising interest rates and taxes likely to suffocate activity for much of this year.”

Capital Economics: GDP resilient, but still set for contraction in Q1 2023

Capital Economics’ senior UK economist, Ruth Gregory, says the UK may avoid a recession in 2022, thanks to the “undeniably encouraging” news that the economy grew slightly in November.

The small 0.1% month-on-month gain in real GDP in November suggests the economy “was not as weak in Q4 as we had previously thought”, Gregory says. But 2023 will still be tough, she adds:

But even if the economy does a bit better than expected in Q4, it is at best stagnating.

And it is too soon to conclude the economy will be able to get through this period of high interest rates and high inflation largely unscathed. We still think a recession is on its way in the first half of 2023.

Does the unexpected growth in November mean the UK could have avoided falling into recession at the end of last year?

It all depends on how the economy fared in December.

ONS director of economic statistics Darren Morgan has told Radio 4’s Today programme that if GDP falls by 0.6% or more in December, that would mean the economy contracted in the fourth quarter of 2022.

That would be the second quarterly contraction in a row – a technical recession.

Morgan says:

If all else is equal, so no revisions to earlier months, for quarter four to be negative the economy has to fall by at least 0.6% [in December].

The ONS will release GDP data for December, and for the fourth-quarter of 2022, on February 10th, Morgan adds.

ONS: The economy grew a little in November, but strikes hit economy

Growth at telecommunications and computer programming companies helped the UK economy to expand, just 0.1%, in November, says ONS director of economic statistics Darren Morgan.

Pubs and bars also did well as people went out to watch World Cup games, he explains, with England and Wales both playing in Qatar.

But this was “partially offset” by further falls in some manufacturing industries, including the pharmaceutical industry (where output can be erratic).

Strikes also hit the transport and postal sectors, Morgan says, adding:

“Over the last three months, however, the economy still shrank – mainly due to the impact of the extra bank holiday for the funeral of Her Majesty Queen Elizabeth in September.”

Hunt: Bringing down inflation will get economy growing

Jeremy Hunt, Chancellor of the Exchequer, says:

“We have a clear plan to halve inflation this year - an insidious hidden tax which has led to hikes in interest rates and mortgage costs, holding back growth here and around the world.

“To support families through this tough patch, we will provide an average of £3,500 support for every household over this year and next - but the most important help we can give is to stick to the plan to halve inflation this year so we get the economy growing again.”

Photograph: ONS

UK GDP: the details

The UK’s services sector grew by 0.2% during November, with the men’s World Cup in Qatar providing a boost to pubs and bars, as supporters gathered to watch games.

But manufacturing continued to struggle, with its output falling by 0.5%.

The construction sector stagnated.

Here’s the details of how the UK economy performed in November, from the Office for National Statistics:

• The services sector grew by 0.2% in November 2022, after growth of 0.7% (revised up from a growth 0.6% in our previous publication) in October 2022; the largest contributions came from administrative and support service activities and information and communication.
  

• Output in consumer-facing services grew by 0.4% in November 2022, following growth of 1.5% (revised up from a growth of 1.2% in our previous publication) in October 2022; the largest contribution to growth came from food and beverage service activities in a month where the FIFA World Cup started.
  

• Production output decreased by 0.2% in November 2022, after a fall of 0.1% (revised down from flat in our previous publication) in October 2022; manufacturing was the main driver of negative production growth in November 2022, partially offset by a positive contribution from mining and quarrying.
  

• The construction sector was flat in November 2022 after growth of 0.4% (revised down from growth of 0.8% in our previous publication) in October 2022.

Monthly GDP is now estimated to be 0.3% below its pre-Covid-19 levels in February 2020, the ONS says.

GDP: UK economy grew by 0.1% in November

Breaking: the UK economy grew slightly in November, better than City economists expected [they had forecast a 0.2% contraction].

The Office for National Statistics reports that UK GDP rose by 0.1% in November, a slowdown on the 0.5% growth recorded in October.

But “looking at the broader picture”, the ONS adds, GDP fell by 0.3% in the three months to November 2022.

Here’s Michael Hewson, chief market analyst at CMC Markets UK, on the UK GDP data due in around 10 minutes…

This morning we get the latest November GDP numbers for the UK economy, which are expected to point to the UK economy already being in a modest recession. With the economy contracting in Q3, it is quite likely we might see a further contraction in Q4.

Monthly GDP in October rose by 0.5%, although on a rolling 3-month basis the economy contracted by -0.3%. This rolling 3-month figure isn’t expected to change in this morning’s November numbers with another figure of -0.3%, while the monthly number is expected to decline by -0.2%.

All sectors of the economy are forecast to show a contraction in November, manufacturing and industrial production are expected to slow by -0.2%, construction output by -0.3% and index of services of -0.1%.

This is perhaps why the pound has underperformed in recent days, in that markets feel the Bank of England doesn’t have as much scope to raise rates given how fragile the UK economy appears to be, with both the Federal Reserve and the European Central Bank considered to have more headroom.

Introduction: UK's November GDP report coming up

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We’re about to learn how well, or badly, the UK economy fared in November, as the recession looms.

The Office for National Statistics is due to release its GDP monthly estimate for November at 7am. Economists predict the UK economy shrank by around 0.2% in November, after better-than-expected growth of 0.5% in October.

A fall in GDP in November wouldn’t officially put the UK into a technical recession – defined as shrinking for two consecutive quarters – but it could signal that one is close.

UK GDP did fall in the third quarter of 2022, by 0.3%, so a contraction in the October-December quarter would mean a recession (we’ll get Q4 data in a month’s time).

Soaring energy prices have hit the economy, weakening consumer spending as the cost of living crisis left consumers with less to spend.

Alvin Tan of RBC Capital Markets told clients:

We expect that GDP contracted again in November.

Retail sales have provided a good guide to the pattern of activity of late, and they fell by 0.4% m/m in November.

Analysts at investment bank Nomura also predicted a month-on-month contraction in November, saying:

“We think that GDP is due a fall bearing in mind the weaker surveys and higher inflation, and as such forecast a 0.3 per cent m-o-m drop in November.”

UK housebuilders have warned this week that demand slowed last autumn, as the turmoil following the mini-budget.

• 7am GMT: UK GDP report for November

• 7am GMT: UK trade report for November

• 9am GMT: Full Year GDP growth report for Germany

• 10am GMT: Eurozone trade balance for November

• 3pm GMT: University of Michigan index of US consumer sentiment