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The UK housing market showed resilience in January 2025, with the Halifax House Price Index rising 0.7% month-over-month, exceeding the expected 0.4% and rebounding from the previous -0.2% decline. On an annual basis, house prices increased 3.0%, slightly below the previous 3.4% growth rate. These figures suggest continued strength in the housing sector despite broader economic uncertainties.

In its February decision, the Bank of England (BoE) reduced its benchmark interest rate by 25 basis points to 4.50%, down from 4.75%. The move aims to support the UK’s slowing economy despite persistent inflation pressures. Policymakers continue to monitor wage growth and inflation trends, signaling a cautious approach to future rate adjustments.

The UK Construction PMI dropped to 48.1 in January, falling below the expected 53.5 and December’s 53.3. This decline marks a contraction in the sector, signaling weaker construction activity amid ongoing economic uncertainties.

The UK’s economic activity showed signs of slowing in January 2025. The S&P Global Composite PMI declined to 50.6, down from the expected 50.9, though slightly above December’s 50.4. Similarly, the S&P Global Services PMI eased to 50.8, missing the forecast of 51.2 and slipping from 51.1 in the previous month. While both indices remain in expansion territory, the slowdown suggests weaker momentum in the UK’s services sector and overall economic growth.

The UK manufacturing sector showed slight improvement in January 2025, with the S&P Global Manufacturing PMI rising to 48.3 from 47.0, surpassing the 48.2 estimate. While the sector remains in contraction territory, the upward trend suggests a gradual recovery in manufacturing activity

The UK economy showed signs of improvement in January 2025, with the S&P Global Composite PMI rising to 50.9, signaling expansion, driven by the Services PMI, which edged up to 51.2. While the Manufacturing PMI improved to 48.2, it remained in contraction, reflecting ongoing challenges. The data suggests resilience in the services sector and easing pressures in manufacturing, pointing to gradual economic recovery.

The UK labor market data for November 2024 revealed a weaker labor market. The Average Earnings Index, including bonuses, rose by 5.6% year-over-year, matching expectations and improving from the previous 5.2%, reflecting sustained wage growth. The Claimant Count Change for December showed a modest increase of 0.7K, well below the forecasted 10.3K, signaling resilience in unemployment benefits claims. Employment Change over the three months to November posted a gain of 35K, aligning with expectations but significantly lower than the prior 173K, indicating a slowdown in job creation. The Unemployment Rate edged up slightly to 4.4%, surpassing the forecast and previous rate of 4.3%, hinting at a marginal softening in labor market conditions.

The UK’s production report for November 2024 reflected a weaker-than-expected performance. Industrial Production fell by 0.4% month-over-month, missing the forecasted growth of 0.1% but improving slightly from the previous decline of 0.6%. Manufacturing Production also contracted, recording a decline of 0.3%, worse than the anticipated -0.2% but better than October’s -0.6%. These figures indicate ongoing challenges in the industrial and manufacturing sectors, potentially driven by subdued demand and external economic pressures.

The UK’s GDP data for November 2024 painted a picture of cautious optimism. Monthly GDP grew by 0.1%, slightly below the forecasted 0.2% but marking a recovery from the previous month’s contraction of -0.1%. The 3-month rolling GDP change remained flat at 0.0%, reflecting a stagnant growth trend. On the trade front, the overall trade balance showed a deficit of £19.31 billion, marginally better than the previous £19.33 billion but falling short of the forecasted £18.00 billion. The non-EU trade balance came in at a deficit of £7.72 billion, slightly worse than the previous figure of £7.65 billion, highlighting ongoing challenges in balancing international trade.

The UK inflation data for December 2024 indicated moderate price pressures. Consumer Price Index (CPI) rose by 0.3% MoM, slightly below the forecast of 0.4% but above the previous 0.1%. In comparison, annual CPI growth slowed to 2.5%, down from the forecasted and prior 2.6%, suggesting a marginal cooling of inflation. The CPIH (Consumer Prices Index including Housing Costs) remained steady at 3.5% YoY. Producer Price Index (PPI) Input edged up by 0.1% MoM, underperforming the forecast of 0.2% but above the previous flat reading. These figures highlight a continued decline in inflationary momentum, which could support expectations of a stable monetary policy stance in the near term.

The UK's inflation data for November 2024 showed a mixed trend, with Core CPI (YoY) rising by 3.5%, slightly below the expected 3.6% but above the previous 3.3%, indicating persistent underlying price pressures. On a monthly basis, Core CPI remained flat at 0.0%, falling short of the 0.4% increase in October. Headline CPI (YoY) matched expectations at 2.6%, marking an increase from October’s 2.3%, while CPI (MoM) came in at 0.1%, in line with forecasts but significantly lower than the prior 0.6%. The data highlights a modest uptick in inflationary pressures on an annual basis, driven by core components. However, the stagnant month-on-month core measure suggests some easing in short-term price momentum.

The UK labour market in October 2024 presented a mixed picture, with strong wage growth and employment gains offset by steady unemployment. 

The Average Earnings Index, including bonuses, increased by 5.2%, exceeding expectations of 4.6% and the previous figure of 4.4%, reflecting robust wage growth. Employment Change surged by 173K, surpassing forecasts of a 12K decline, though it remained below the previous 253K increase. Meanwhile, the Unemployment Rate held steady at 4.3%, aligning with forecasts, while the Claimant Count Change in November saw a minimal rise of 0.3K, a sharp drop from the prior 28.2K increase, suggesting stabilization in jobless claims. The data underscores resilience in the labour market despite broader economic pressures, with markets closely watching the Bank of England's policy response.