The United Kingdom's economy expanded by 0.1% in November, according to official data released on Thursday, defying expectations of a contraction. The growth was primarily driven by a rebound in the services sector and a strong performance from manufacturing, although construction output fell.
Services Sector Leads Recovery
The services sector, which accounts for around 80% of the UK economy, grew by 0.3% in November. This was a significant improvement from the previous month, when it contracted by 0.1%. Key contributors included information and communication, as well as administrative and support services.
Manufacturing and Construction
Manufacturing output rose by 0.4% in November, recovering from a 0.5% drop in October. The growth was broad-based, with 10 out of 13 sub-sectors expanding. However, construction output fell by 0.2%, continuing a trend of volatility in the sector. The overall industrial production, which includes manufacturing, mining, and utilities, grew by 0.3%.
The data from the Office for National Statistics (ONS) showed that the UK economy was 1.5% larger than in February 2020, before the pandemic. However, the quarterly growth for the three months to November was flat, indicating a slowdown in the broader economy.
Economic Outlook
The better-than-expected monthly data provides some relief for the government and the Bank of England, which have been grappling with high inflation and weak growth. The Bank of England has raised interest rates aggressively to curb inflation, which remains above its 2% target. Analysts caution that the economy remains fragile, with risks from rising borrowing costs and global uncertainties.
Chancellor Jeremy Hunt welcomed the figures but stressed that there was "still a long way to go." He reiterated the government's commitment to halving inflation and boosting growth through measures such as investment in infrastructure and innovation.
The ONS also revised up October's GDP estimate from a 0.3% contraction to a 0.2% contraction, indicating a slightly less severe slowdown than initially thought.
