The economy was again a little stronger than expected in November. A 0.1 percent monthly increase in GDP was 0.3 percentage points above the market consensus and, following an unrevised 0.5 percent gain in October, put quarterly growth at minus 0.3 percent, up a tick from a downwardly revised minus 0.4 percent in the three months to October. Annual growth slowed sharply from 1.1 percent to 0.2 percent on negative base effects and the economy was 0.3 percent smaller than just before its pre-Covid-19 level in February 2020.

The minimal headline monthly gain was attributable to services where output climbed 0.2 percent after a 0.7 percent gain last time. Administrative and support service activities (2.0 percent) and information and communication (1.7 percent) enjoyed a particularly good period. Output in consumer-facing services was up 0.4 percent following a 1.5 percent rise in October with the largest contribution coming from food and beverage service activities reflecting the start of the FIFA World Cup. By contrast, industrial production fell 0.2 percent on the back of a 0.5 percent drop in manufacturing output. Construction was flat.

November's meagre gain puts average GDP in the first two months of the quarter 0.1 percent above its mean level in the third quarter. Absent any revisions, this leaves December needing a contraction of more than 0.4 percent for the quarter as a whole to register the negative growth forecast by the BoE. As such, the economy might have avoided recession last year, an outturn that would boost the likelihood of further monetary tightening next month. Today's update puts the ECDI at minus 3 and the ECDI-P at 5, both measures indicating that overall economic activity is performing much as financial markets expected.

GDP in the month of November is expected to contract 0.2 percent versus 0.5 percent growth in October.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The monthly report is based on output data only as the income and expenditure series are not available.

GDP covers all aspects of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market investors like to see healthy economic growth because robust business activity translates to higher corporate profits. GDP contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. However, the monthly report is quite limited and only provides data on the main output sectors. More detailed information is available in the quarterly reports.