Main points

 • Though GDP in October grew by 0.5 per cent relative to September, this figure largely reflects the weakness in September resulting from the additional Bank Holiday for the State Funeral of HM Queen Elizabeth II. So, despite the seemingly positive outlook given by the monthly figure, our forecast suggests that the risk of a contraction in GDP in the last quarter of this year remains elevated.

• GDP contracted by 0.3 per cent in the three months to October, consistent with our forecast last month. This was driven by a 1.7 per cent decrease in production.

• The S&P Global/CIPS UK PMIs for November recorded headline business activity balances below the neutral 50 for both the manufacturing and services sectors and a balance of 50.4 for the construction sector. These figures point to a strong risk that anaemic business activity will drag on GDP growth in the fourth quarter of 2022.

• Despite survey data indicating that business confidence improved in November relative to the slump caused by the Truss government and its ‘mini-budget’, firms in all three sectors continue to have an overwhelmingly pessimistic outlook. Elevated prices, interest rates and uncertainty, which continue to limit household and businesses spending, alongside supply-side issues like labour shortages and strike action, all bode poorly for UK economic performance in the fourth quarter of this year. That said, we expect growth in the construction sector alongside the seasonal increase in consumption to result in GDP remaining flat in Q4.