IoD – Strong monthly economic data does not alter picture of a slowing economy

Commenting on ONS data that shows monthly GDP grew by 0.5% in October 2022, Kitty Ussher, Chief Economist at the Institute of Directors, said:

“At a first glance, businesses worried about prospects for the UK economy can take heart from news that GDP growth was strongly positive in October, growing 0.5% compared to September even at a time when there was both financial and political instability. In particular, consumer-facing services like retail, travel and recreation all recorded strong growth on the month.

“However, the growth in October is mainly a rebound from the negative economic impact of the additional bank holiday for the state funeral in September. Because it was a one-off event, this bank holiday was not included in the usual seasonal adjustments of September’s data.

“Overall, today’s data does not alter the picture of a slowing economy. Taking a three-month view, the economy contracted by 0.3% from August to October. It is this longer-term trend that will have more impact on the Monetary Policy Committee when it meets on Thursday to consider whether the time has come to slow the pace at which interest rates are rising.”