In the last month, the ONS reported its Gross Domestic Product (GDP) statistics, which detail that the economy barely grew between July and September. More recent survey evidence also indicates a further slowing down in economic growth.

The second quarter of the year recorded a 0.5% growth rate. However, the latest GDP statistics reveal that the UK’s economic output rose only 0.1% across the whole of the third quarter. This steep slowdown in economic momentum is a much weaker outcome than predicted by economists.

A monthly analysis of the data revealed that the economy experienced a 0.1% contraction in September alone. The Office for National Statistics (ONS) reported a substantial decrease in manufacturing output, while the services sector remained stagnant. A number of economists attributed September’s weakness to budget uncertainty, which was believed to have affected the behaviour of both households and firms.

Data from a recent economic survey also indicates that business optimism continued to decline in the weeks following October’s Budget. The S&P Global/CIPS UK Purchasing Managers’ Index (PMI) flash headline growth indicator decreased from 51.8 in October to 49.9 in November, marking the first time in 13 months that the figure had fallen below the 50 threshold, indicating a decrease in private sector output.

According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

“The first survey on the health of the economy after the Budget makes for gloomy reading. Although only marginal, the downturn in output represents a marked contrast to the robust growth rates seen back in the summer and are accompanied by deepening concern about prospects for the year ahead.”

The BoE also published revised economic growth projections last month, highlighting that the Bank had reduced its forecast for this year from 1.25% to 1.0%. Despite this, it is now predicting a stronger 2025. The projected growth figure for the following year has been raised to 1.5% from the previous forecast of 1.0%.

Markets (Data collected by TOMD)

Investors closely monitored potential US tariffs and the ongoing political unrest in France at the end of November. The FTSE 100 was flat, while European markets closed marginally higher on the final trading day of the month, as inflation estimates proved correct. In the meantime, US stocks declined from the record highs they had achieved earlier in the week.

The FTSE 100 index in the United Kingdom concluded the month at 8,287.30, representing a 2.18% increase, while the FTSE 250 index closed November at 20,771.57, representing a 1.88% increase. The FTSE AIM closed at 732.49 in the month, representing a 0.63% decline. The Euro Stoxx 50 closed November at 4,804.40, a 0.48% decrease. The Nikkei 225 index in Japan concluded the month at 38,208.03, representing a 2.23% monthly decline.

President-elect Donald Trump has proposed imposing tariffs on imports from Canada, Mexico, and China. There are fears that these measures may be implemented in other regions. The Dow Jones concluded November at 44,910.65, a 7.54% increase, while the NASDAQ, which is oriented towards technology, closed the month at 19,218.17, a 6.21% increase.

Concerning foreign exchange, the euro ended the month at €1.20 in relation to sterling, with the US dollar closing at $1.26 against sterling and at $1.05 for the euro.

Brent crude concluded November trading at approximately $68 per barrel, translating to a 5.40% decline for the month. Speculation regarding OPEC+’s production plans intensified in anticipation of their December meeting, resulting in fluctuations in oil prices at the month’s completion. By the end of the month, gold was trading at approximately $2,683 per troy ounce, representing a monthly decline of 1.84%.

Index	Value (29/11/24)	Movement since 31/10/24
FTSE 100	8,287.30	+2.18%
FTSE 250	20,771.57	+1.88%
FTSE AIM	732.49	-0.63%
Euro Stoxx 50	4,804.40	-0.48%
NASDAQ Composite	19,218.17	+6.21%
Dow Jones	44,910.65	+7.54%
Nikkei 225	38,208.03	-2.23%

Increase in the unemployment rate

The ONS has advised that the data should be interpreted with a reasonable degree of scepticism, as the smaller survey sample sizes further exacerbate the volatility of the data. This is despite the fact that official figures published last month indicated an increase in the unemployment rate.

The most recent ONS labour market release indicated that the unemployment rate was 4.3% from July to September 2024, which is higher than the previous three-month period’s rate of 4.0%. The data also indicated a decrease of 9,000 payrolled employees in the three months leading up to September, with preliminary projections indicating that the figure will decrease by an additional 5,000 in October.

The number of job vacancies declined once more, with 35,000 fewer reported in the August–October period than in the previous three months. The statistics agency stated that the most recent data indicates a ‘continued easing of the labour market.’

The ONS is revising the statistical methodology used to calculate its labour market figures. The Resolution Foundation’s recent research has emphasised the current issues with data reliability. According to the think tank’s analysis of tax office, self-employment, and new population data, official statistics may be failing to count as many as one million individuals who are believed to be employed.

Retail sales experience a more significant decline than anticipated

The most recent official retail sales figures indicate that sales volumes decreased before the October Budget, and more recent survey data suggests that sales in November were also ‘disappointing.’

Following a period of growth over the previous three months, the ONS released figures last month that indicated a 0.7% decline in retail sales volumes in October. Although analysts had anticipated a decrease in sales, the October decline was more substantial than expected. The ONS stated that the decline was primarily due to a ‘notably poor month for clothing stores.’ However, the ONS also observed that retailers across the board reported that consumers were reserving their spending in anticipation of the Budget.

Nevertheless, the retail sector found some solace in the most recent consumer confidence index from GfK, which revealed a decrease in pessimism following the Budget. The headline figure for November reached its greatest point since August, with growth observed in all five components of the survey. This suggests that consumers may not be as deterred from spending as Christmas approaches.

Nevertheless, the November CBI Distributive Trades Survey revealed that retailers anticipate that the trading environment will still be challenging. The survey recognised a ‘some improvement’ in the retail environment since mid-year, but it also reported “disappointing sales” in November, with volumes anticipated to remain below seasonal norms in December.

 

All information is accurate at the time of writing (2 December 2024). Before making any financial decisions, it is crucial to seek the guidance of a professional. The accuracy and completeness of the information contained in this document cannot be guaranteed and may be subject to change without notice and change. All information is based on our current understanding and is intended for guidance only. It does not offer personalised investment advice. Specific regulations may differ among regions of the United Kingdom. We are unable to accept legal responsibility for any errors or omissions that may be present. The current or proposed levels and bases of taxation and the reliefs from taxation are subject to change. The value of these benefits is contingent upon each investor’s unique circumstances. Reproducing any portion of this document without prior authorisation is prohibited.

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