November 2024 UK Alert: Key Economic Updates
As the year ends, the UK economy finds itself at a crossroads, with growth slowing, confidence wavering, and global uncertainty adding to domestic pressures. The economy’s resilience is being tested by challenges across sectors, while policymakers and businesses adapt to an evolving landscape. This report delves into the key highlights of the UK and US economies, as well as the broader implications for the year ahead.
Slowing Growth
The UK economy experienced a marked slowdown in Q3 2024, with GDP growing by just 0.1% quarter-on-quarter, down from the robust expansion seen in the first half of the year. Consumer-facing services led modest growth with a 0.5% increase, while professional, financial, and business services sectors contracted. Construction showed signs of recovery, breaking a three-quarter decline with gains driven by new infrastructure projects, though weak activity in private housing repairs weighed on the sector. Manufacturing performance was mixed; while industries like chemicals performed well, transport equipment production faced hurdles, particularly from declining vehicle exports.
Business Confidence Weakens
The final quarter of 2024 saw a continued decline in business sentiment, with firms delaying decisions amid ongoing budget uncertainties, geopolitical tensions, and fragile export demand. The November Purchasing Managers’ Index (PMI) highlighted the weakest private sector growth since late 2023. Rising employer National Insurance Contributions (NICs) and persistent wage pressures in the service sector have further dampened hiring and investment plans, compounding challenges for businesses navigating cost pressures.
Consumer Sentiment and Spending
Despite the challenges, consumer confidence saw a modest recovery in November, aided by an interest rate cut and the absence of new personal tax hikes in the latest budget. Spending on essentials such as supermarkets and travel showed slight growth, while discretionary purchases, especially in furniture and clothing, continued to decline. Retailers are cautiously optimistic about the upcoming festive season, though lingering economic concerns could dampen overall spending levels.
US Economic Trends
In contrast, the US economy demonstrated resilience, driven by steady consumer spending and a robust labor market. However, inflation worries and uncertainty surrounding the upcoming presidential transition have tempered optimism. President-elect Trump’s proposed tariffs on imports from Canada, Mexico, and China have raised concerns about potential trade wars and their implications for global economic growth and inflation trends.
Key Indicators (Q3 2024)
- GDP Growth: 0.5%
- CPI Inflation: 2.3%
- Unemployment Rate: 4.3%
- Bank Rate: 4.75%
Coming Up
- Household Finance Review (4th December)
- Business Finance Review (12th December)
- Annual Mortgage Forecasts (Week of 16th December)
Conclusion
The UK economy is heading into 2025 under a cloud of uncertainty, with slowing growth, cost pressures, and subdued confidence shaping the outlook. Businesses and consumers alike are adapting to these challenges, while the global economy braces for the potential impacts of US trade policy changes. As policymakers navigate these complexities, the focus will be on fostering stability and resilience to drive sustainable growth in the year ahead.
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