| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Month over Month | -0.3% | -0.5% | 0.1% | |
| 3-Months over 3-Months | 0.0% | 0.0% | -0.3% | -0.1% |
Highlights
The economy was a good deal weaker than expected at year-end. Real GDP shrank by 0.5 percent on the month which, following an unrevised 0.1 percent increase in November, made for zero quarterly growth. Accordingly, the UK just about avoided recession in 2022 but versus December 2021, total output was down 0.1 percent and it was also 0.5 percent below its pre-Covid level in February 2020.
December's monthly contraction was led by services which fell 0.8 percent after a 0.2 percent rise in mid-quarter. Human health activities, education, arts, entertainment and recreation activities as well as transport and storage all saw hefty declines. Output in consumer facing services was down 1.2 percent. By contrast, industrial production expanded 0.3 percent, its third consecutive rise, although within this manufacturing was only flat. Elsewhere, construction was also unchanged from November when it fell a revised 0.5 percent.
Today's update means the UK economy will begin 2023 on a decidedly soft footing and makes recession in the first half of the year all the more probable. This may trim the size of any interest hike from the BoE next month but with inflation still so high, a further tightening still looks likely. That said, with the UK's ECDI at minus 1 and the ECDI-P at minus 5, in general economic activity is broadly matching market expectations.
December's monthly contraction was led by services which fell 0.8 percent after a 0.2 percent rise in mid-quarter. Human health activities, education, arts, entertainment and recreation activities as well as transport and storage all saw hefty declines. Output in consumer facing services was down 1.2 percent. By contrast, industrial production expanded 0.3 percent, its third consecutive rise, although within this manufacturing was only flat. Elsewhere, construction was also unchanged from November when it fell a revised 0.5 percent.
Today's update means the UK economy will begin 2023 on a decidedly soft footing and makes recession in the first half of the year all the more probable. This may trim the size of any interest hike from the BoE next month but with inflation still so high, a further tightening still looks likely. That said, with the UK's ECDI at minus 1 and the ECDI-P at minus 5, in general economic activity is broadly matching market expectations.
Market Consensus Before Announcement
The economy is expected to have shrunk 0.3 percent on the month in December, putting quarterly growth at zero.
Definition
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.
Description
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.
