Economic Review – February 2025
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Data released last month by the Office
for National Statistics (ONS) revealed
that the UK economy unexpectedly grew
in the final three months of last year,
although more recent survey evidence
still points to a sluggish outlook.
The latest gross domestic product
(GDP) statistics showed that economic
output rose by 0.1% in the fourth quarter
of 2024, after flatlining across the previous
three-month period. While the figure still
only represents a relatively lacklustre rate
of expansion, it was significantly stronger
than economists had been expecting, with
the consensus forecast in a Reuters poll
predicting a 0.1% contraction during the
final three months of the year.
A monthly breakdown showed that the
final quarter GDP figure was lifted by a
strong performance in December, which
saw a 0.4% expansion. This reflected
robust service sector growth, with ONS
noting that wholesalers, film distributors,
pubs and bars all did particularly well,
while machinery manufacturers
and pharmaceutical companies performed
strongly too. In addition, however,
it was noted that December’s growth
relied on government spending and a
potentially temporary build-up in firms’
inventories.
Data from a recently released economic
survey also suggests growth in the
first two months of 2025 has been tepid.
February’s flash headline growth indicator
from the S&P Global/CIPS UK Purchasing
Managers’ Index (PMI) dipped to 50.5
from 50.6 in January, leaving the index
only marginally above the 50.0 no change
threshold, implying the UK economy has
seen little growth so far this year.
S&P Global Market Intelligence’s Chief
Business Economist Chris Williamson
said, “Early PMI survey data for February
indicate that business activity remained
largely stalled. While marginal output
growth was eked out in February, order
books deteriorated at a rate not seen
since August 2023 to hint at likely cuts to
business activity in the coming months
unless demand revives.”