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United Kingdom GDP January 2024

United Kingdom: Economic activity speeds up in January

GDP grew 0.2% in month-on-month seasonally adjusted terms in January, which contrasted December’s 0.1% decrease and was in line with market expectations.

On a rolling quarterly basis, GDP fell at a more moderate pace of 0.1% in November last year to January (October–December: -0.3% qoq).

January’s turnaround came on the back of rebounds in the services and construction sectors. The expansion in services was driven by retail trade, following the sharp fall in retail activity observed in December.

The January data is in line with our panelists’ forecasts for a quarter-on-quarter GDP expansion in Q1, following two consecutive quarters of contraction. However, the economy will continue to grow more slowly than its potential, due to the dampening effect of high interest rates.

Nomura analysts argued that the January data should be interpreted with caution:

“It’s not unusual to see patterns of rising output one month after a fall in output the previous month, a pattern that’s been pretty much entrenched over the last year. Still, we do think [January’s GDP] rise marks the start of a general improvement in the economic outlook, as we’ve seen from various surveys in recent months. While this wouldn’t preclude further monthly falls in output due to the inherent volatility in the monthly GDP series, we would suggest that on average growth should be positive over the coming year.”

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