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United Kingdom GDP February 2024

United Kingdom: Economic activity growth loses pace in February

GDP rose 0.1% month-on-month in seasonally adjusted terms in February (January: +0.3% mom), matching market expectations. On a rolling quarterly basis, GDP rose 0.2% in December last year to February (November last year to January: 0.0% qoq).

The slowdown largely reflected a deterioration in construction and softer services growth, which outweighed a rebound in manufacturing.

Taken together, the data for January and February chimes with our panelists’ forecasts for a rebound in GDP in quarter-on-quarter terms in Q1 following Q4’s contraction.

On the outlook, ING’s James Smith said:

“We think the outlook for the UK economy is undoubtedly improving. For one thing, the service sector PMIs, which represent the lion’s share of UK activity, have been above the breakeven 50 level for five months now. Real wage growth is consistently positive, with headline inflation set to dip below 2% in the second quarter at a time where nominal wage growth will likely stay well north of 4%. […] Admittedly, the impact of past rate hikes is still feeding through to the economy, though we think the majority of the mortgage squeeze is now behind us. By the summer, we think 80% of the passthrough of higher Bank Rate to mortgage holders will have happened.”

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