The news came as a surprise to many, with the UK economy showing surprising resilience in November, growing 0.3%, more than three times analyst forecasts predicting a 0.1% upturn. The other big piece propelling this growth was an unexpected return of the automotive sector. Jaguar Land Rover (JLR) was instrumental in this recovery, starting back up after having cleared production issues earlier in the year.
In November, motor vehicle output jumped by a stunning 25.5%, as it continued to reflect a rebound from earlier severe disruptions. This development came just weeks after Jaguar Land Rover (JLR) experienced a shutdown of production at its UK factories due to a cyber-attack. They were not fully operational again until October. The good news from the automotive sector gave a big lift to all economic performance for the month.
This wasn’t the case for every sector. The industry hardest hit was construction. They saw a dip of 1.3% in November. This decline marks the steepest three-month decrease in almost three years. It sends signals of profound challenges which, if left unchecked, could threaten any future growth in this area.
After such a strong increase in November, the news was discouraging. Remember, the monthly GDP numbers tend to be much spikier, with just a fractional 0.1% increase seen compared to the rolling three-month average.
Surprisingly, the services sector made a positive contribution in November, adding another layer of shine to this economic picture. Economists have largely cheered the stronger-than-expected November numbers, but warned that growth will probably continue to be tepid in the months ahead.
“The chancellor promised growth as her number one mission, but a failure to grip the benefits bills – and instead putting up taxes – is weighing heavily on business and the economy,” – Mel Stride
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, noted that many sectors appeared to have “seemingly shrugged off pre-Budget uncertainty.” That sentiment would be spot on, capturing a bit of the cautious optimism I’m hearing about the economy’s capacity to pivot, compensate and react under multiple pressures.
Some analysts continue to be pessimistic when it comes to judging the general state of the economy. Shadow Chancellor Mel Stride even managed to raise concerns over flatlining growth. He cautioned that while November’s numbers seem encouraging, they cannot be relied on to bring a substantial economic comeback.