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The December 2024 PMI data from S&P Global/CIPS highlights a growth in the services sector offset by a continued contraction in manufacturing.

• The UK Composite PMI remained steady at 50.5, reflecting stagnant overall economic activity. While this figure stays above the critical 50-mark, indicating expansion, the broader economy shows signs of sluggishness.
• The Manufacturing PMI declined to 47.3, falling below the previous reading of 48.0 and the forecast of 48.4. This marks a deeper contraction in the manufacturing sector, pointing to ongoing challenges in industrial output and demand.
• In contrast, the Services PMI climbed to 51.4, surpassing both the previous reading of 50.8 and the forecast of 50.9. This improvement indicates modest growth in the services sector, which continues to provide crucial support to the UK economy amidst challenges in other areas.

The UK economy continued to weaken in November, with PMI data indicating softening activity across key sectors:

• Composite PMI: Slowered to 50.5, slightly above the 49.9 forecast but down from 51.8 in October, indicating marginal growth.
• Services PMI: Fell to 50.8, just above expectations of 50.0 but below October's 52.0, signaling a slowdown in service sector expansion.
• Manufacturing PMI: Dropped to 48.0, missing the forecast of 48.6 and down from 49.9, reflecting ongoing contraction in manufacturing.

These figures highlight persistent economic challenges, with services barely expanding and manufacturing contracting further. The UK economy faces mounting pressure from high costs and subdued demand, raising concerns about growth sustainability.

The UK PMI Data for November 2024 indicates growing signs of economic weakening, with key sectors showing reduced momentum or contraction:

• The S&P Global/CIPS UK Composite PMI fell to 49.9, down sharply from the previous 51.8, slipping below the critical 50.0 threshold and signaling a contraction in overall business activity.
• The Manufacturing PMI dropped to 48.6, below the forecasted 50.1 and last month’s 49.9, indicating a deepening contraction in the manufacturing sector amid sluggish demand.
• The Services PMI decreased to 50.0, just on the expansion-contraction boundary, missing expectations of 52.3 and reflecting a significant slowdown in service sector growth.

This data suggests mounting economic pressures in the UK, with softening demand and ongoing challenges from elevated interest rates and inflation affecting business activity. The weakening trend could add to concerns about the UK’s economic resilience heading into 2025.

The UK Retail Sales report for October 2024 shows a significant slowdown in consumer spending:

• Core Retail Sales (MoM) declined by -0.9%, far below the expected -0.3% and the previous month's 0.1% growth.
• On a yearly basis, Core Retail Sales (YoY) grew by 2.0%, but this is a sharp drop compared to the forecasted 3.3% and last month’s 3.2%.

Similarly, broader retail sales figures also showed weakness:

• Retail Sales (MoM) fell by -0.7%, underperforming expectations of -0.3% and reversing the 0.1% growth seen previously.
• Retail Sales (YoY) grew by 2.4%, below the forecasted 3.4% and prior 3.2%.

These declines suggest that rising living costs, higher interest rates, and economic uncertainty are weighing on consumer spending in the UK. This could pose challenges for the broader economic recovery as household consumption remains a key growth driver.

Annual inflation in the UK accelerated to 2.3% in October, up from 1.7% in September, exceeding forecasts of 2.2%. This marks the sharpest rise since April 2021. On a monthly basis, the CPI jumped 0.6%, recovering from a flat reading in the prior month.

Core CPI, excluding energy and food prices, increased 0.4% MoM, pushing the annual rate slightly higher to 3.3%, up from 3.2% in September.

With inflation back above the Bank of England's target and the Labour Party's new budget potentially adding inflationary pressures, the BoE may opt to hold rates steady in its December meeting to assess economic developments.

• Average Earnings Index + Bonus (September): Increased by 4.3%, aligning with expectations and slightly higher than the previous month’s 3.9%. This suggests moderate wage growth, indicating some resilience in earnings despite broader economic pressures.
• Claimant Count Change (October): Rose by 26.7K, below the forecast of 30.5K but notably higher than the prior 10.1K, signaling a potential rise in job-seekers or those requiring state support.
• Employment Change (3M/3M as of September): Recorded an increase of 219K, showing a positive, though moderated, growth compared to the previous 373K. This indicates continued job creation but at a slower pace.
• Unemployment Rate (September): It rose to 4.3 percent, compared to expectations of 4.1 percent and 4.0 percent the previous month, indicating a gradual increase.

Overall, the data portrays a mixed picture with stable wage growth and employment gains but a slight uptick in unemployment, pointing to evolving challenges in the labor market.

In September, the UK's M4 Money Supply (MoM) increased by 0.6%, surpassing the anticipated 0.1%, while the M4 Money Supply (YoY) rose significantly from 1.7% to 3.5%, indicating notable growth in broad money supply. However, Consumer Credit fell short of expectations, with an actual figure of £1.231 billion compared to the forecasted £1.4 billion. Additionally, Net Lending to Individuals (MoM) was recorded at £3.8 billion, slightly below the expected £4.1 billion. These mixed figures suggest an expansion in money supply but moderated borrowing activity among consumers and individuals.

Retail sales in the United Kingdom outperformed market forecasts in September 2024, indicating a potential boost in consumer spending. With inflation easing, this could encourage further spending in the coming months.

Key highlights of the September retail sales data include:

• Core Retail Sales (YoY): Increased by 4.0%, significantly above the anticipated 3.2% and up from the previous month’s 2.2%.
• Core Retail Sales (MoM): Rose by 0.3%, exceeding the forecasted -0.3%, though slower than August's 1.1%.
• Retail Sales (YoY): Reported a 3.9% increase, beating the 3.2% forecast and improving from the prior 2.3%.
• Retail Sales (MoM): Increased by 0.3%, surpassing the expected -0.3%, but slightly down from the previous 1.0%.

The stronger-than-expected retail sales growth suggests resilience in consumer demand, even as the UK navigates inflationary pressures and broader economic challenges.

The UK Consumer Price Index (CPI) remained flat in September, which brought the annual inflation rate down to 1.7%, significantly lower than the 2.2% recorded in August and the 1.9% expected by the market.

This decline in inflation signals easing price pressures in both the producer and consumer sectors, pointing toward reduced cost pressures across the economy. Despite this, flat core output figures indicate ongoing stability in underlying inflation.

With inflation moderating more rapidly than anticipated, the Bank of England (BoE) may now find it easier to justify cutting interest rates at its upcoming November meeting.

The UK unemployment rate fell to 4.0% in August, down from 4.1% in July and market estimates. At the same time, the Average Earnings Index, including Bonus, rose only 3.8%, down from a 4.1% increase in July, as widely expected. These data can now allow the BoE to implement any needed policy patiently.

The UK economy showed signs of slowing in September as key PMI data fell short of market expectations. The S&P Global/CIPS Services PMI came in at 52.4, below the 52.8 forecast and down from 53.7 in August.

Earlier in the week, the UK’s manufacturing sector also showed weakness, with the Manufacturing PMI falling to 51.5, down from 52.5 in August. This decline carried through to the Composite PMI, which dropped to 52.6, missing the 52.9 estimate and falling from 53.8 in the previous month.

These figures signal a potential cooling in the UK’s economic activity, raising concerns about growth momentum heading into the final quarter of the year.

The United Kingdom's Gross Domestic Product (GDP) increased by 0.7% year-over-year (YoY) in the second quarter, below the 0.9% expectations but better than the 0.3% growth in the previous quarter. 

The UK's Current Account came in at £-28.397B, better than the £-32.2B forecast for Q2. Business Investment for the same period increased by 1.4% quarter-over-quarter (QoQ), up from 0.6% in the previous quarter.