UK economy contracts for second consecutive month

The UK economy unexpectedly shrank in October 2024, with the Office for National Statistics (ONS) reporting a 0.1% contraction in gross domestic product (GDP). This marks the second consecutive month of negative growth, following a similar 0.1% decline in September, and the first back-to-back contraction since the Covid-19 pandemic’s onset in 2020.

The contraction in October was largely driven by a 0.6% drop in production output, particularly in manufacturing and mining and quarrying. The construction sector also contributed to the decline, falling by 0.4%, reversing a modest 0.1% growth seen in September.

Services, the largest component of the UK economy, recorded no growth for the second month in a row. Weak performance in pubs, restaurants, arts, entertainment, and wholesale sectors offset gains in transport and science and technology.

Despite the October setback, the economy managed to post a 0.1% growth in the three months to October, compared with the previous three months. This modest growth was attributed to a 0.1% increase in the services sector and a 0.4% rise in construction output during the quarter, though these gains were partially offset by a 0.3% decline in production output.

The contraction came as a surprise to most economists, who had anticipated a 0.1% GDP growth for October. Analysts have highlighted the drag from weak performance in consumer-facing sectors, as well as ongoing uncertainty ahead of the government’s autumn Budget.