The UK economy grew slightly by 0.1 percent in the final quarter of 2024, precisely a percentage point above consensus forecasts for the quarter and marking a return to growth after a stagnant third quarter. While modest, this performance contributed to an annual GDP expansion of 1.4 per cent in the fourth quarter compared to the 2023 fourth quarter, indicating a slow but sustained recovery and 0.3 percentage points above the estimated forecast for the quarter.

The services sector remained the backbone of the economy, expanding by 0.2 percent, while construction saw a solid 0.5 percent increase. In contrast, production output fell by 0.8 percent, reinforcing manufacturing's ongoing struggles. On the expenditure side, net trade and capital investment declines were offset by a notable increase in inventories, suggesting businesses stockpiled goods, possibly in anticipation of future demand shifts. The latest figures take the UK RPI and RPI-P to 5. This means that economic activities are generally within the consensus of the UK economy.

The economy hit a wall in the second half. No growth is the call for Q4 from Q3, same as in Q3 from Q2. The forecast looks for a 1.1 percent rise from a year ago in Q4.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Since 2018, the first, or provisional, estimate includes the GDP expenditure components as well as data on the main output sectors. These results are updated in the second, and final, report.

GDP is the all-inclusive measure 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. The GDP report 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. These data are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower.

Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth. For example, if the UK reports that the consumer price index has risen more than the Bank of England's 2 percent inflation target, demand for sterling could decline. Similarly, when the Bank of England lowers interest rates, the pound sterling weakens. (Currency traders also watch the interest rate spread between countries.)