U.K. GDP rose for first time in 4 months in November

By Geoffrey Smith

Investing.com -- The British economy grew for the first time in four months in October after a September affected by the funeral of Queen Elizabeth II, but there was little sign of a sustained turn for the better as high inflation continued to take its toll.

Gross domestic product rose 0.5% from September, as shops and other consumer-facing services returned to normal working hours. Construction output also grew for the fourth month in a row, by a stronger-than-expected 0.8%, and manufacturing output also performed better than expected growing 0.7%.

The numbers mean that the U.K.'s economy has finally recovered to the level it was at immediately before the pandemic erupted, nearly three years ago. However, GDP in the three months through October was still down 0.3% from the period through September.

The figures come three days before the Bank of England's next Monetary Policy Council meeting, where the Bank is expected to raise its key interest rates again despite the clear signs that the U.K. is slipping into recession. Analysts at ING expect the Bank to raise its key rate by 50 basis points to 3.50%, with another 50 basis points likely in February.

Among services, which were the chief driver of growth in the month, the ONS noted that car and motorcycle repairs grew particularly strongly, at a time when households and businesses are dialing back on purchases of new cars. The Society of Motor Manufacturers and Traders reported the smallest rise in September sales in 24 years.

"Contraction is evident, but it is clearly less severe than feared," tweeted Daniel Lacalle, chief economist with Madrid-based asset manager Tressis.

The pound was largely unchanged on the news at the start of a week set to be dominated by central bank meetings on both sides of the Atlantic. The Federal Reserve's Federal Open Markets Committee will announce its latest policy decisions on Wednesday, while the European Central Bank and Swiss National Bank join the BoE in setting policy on Thursday.