| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | 0.1% | 0.3% | -0.5% |
| 3-Months over 3-Months | -0.1% | 0.0% | 0.0% |
Highlights
The economy was a good deal stronger than expected at the start of the year. Real GDP expanded by 0.3 percent on the month, only reversing a portion of December's unrevised 0.5 percent contraction but beating the market consensus by 0.2 percentage points. The advance left the quarterly change flat at 0.0 percent but nudged up annual growth from minus 0.1 percent to also 0.0 percent. Even so, total output was still 0.2 percent below its pre-Covid level in February 2020.
January's monthly gain was led by services which grew 0.5 percent after a 0.8 percent slump at year-end. Sizeable contributions came from education, transport and storage, human health activities, and arts, entertainment and recreation activities, all of which rebounded having fallen in December. Output in consumer facing services rose 0.3 percent. By contrast, industrial production dropped 0.3 percent and so unwound December's advance. Elsewhere, construction declined 1.7 percent after a flat performance in December.
Today's update further reduces the likelihood of the UK economy falling into recession in the first half of 2023 although that is still a clear possibility. It also increases the chances of another hike in Bank Rate later this month. To this end, the UK's ECDI and ECDI-P now stand at 41 and 40 respectively, indicating that economic activity in general is running a good deal hotter than expected.
January's monthly gain was led by services which grew 0.5 percent after a 0.8 percent slump at year-end. Sizeable contributions came from education, transport and storage, human health activities, and arts, entertainment and recreation activities, all of which rebounded having fallen in December. Output in consumer facing services rose 0.3 percent. By contrast, industrial production dropped 0.3 percent and so unwound December's advance. Elsewhere, construction declined 1.7 percent after a flat performance in December.
Today's update further reduces the likelihood of the UK economy falling into recession in the first half of 2023 although that is still a clear possibility. It also increases the chances of another hike in Bank Rate later this month. To this end, the UK's ECDI and ECDI-P now stand at 41 and 40 respectively, indicating that economic activity in general is running a good deal hotter than expected.
Market Consensus Before Announcement
GDP in the month of January is expected to edge 0.1 percent higher versus 0.5 percent contraction in December.
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.
