The UK Economy's Performance in November 2024

Assem Mansour

5 months ago

The UK economy experienced a slight GDP growth of 0.1% in November 2024 compared to the previous month. This growth reflects limited improvement in the services and construction sectors amidst a continued decline in the production sector. This article delves into the performance of different sectors and their impacts on the UK economy.

Sector Performance

1. Services Sector

The services sector, which serves as the backbone of the UK economy, grew by 0.1% in November 2024, after a similar decline in October 2024. Among the 14 subsectors within services:

• Health and social work activities were the most significant contributors, rising by 1.3%.
• Professional, scientific, and technical activities increased by 0.6%.
• Conversely, administrative and support services fell by 1.3%, negatively affecting the sector's overall performance.

2. Production Sector

The production sector continued its downward trend, declining by 0.4% in November 2024, following a 0.6% drop in October 2024. The main contributors were:

• Manufacturing decreased by 0.3%.
• Mining and quarrying fell by 1.5%.
• However, electricity and gas showed a marginal increase of 0.2%.

3. Construction Sector

The construction sector was the bright spot in the economy, achieving a 0.4% growth in November 2024 after a 0.3% decline in the previous month. The growth was driven by:

• New work increased by 0.3%.
• Repair and maintenance rose by 0.5%, particularly in commercial and industrial sectors.

Overall GDP Performance

• Monthly Basis: The economy grew modestly by 0.1%.
• Three-Month Basis: The economy showed no growth compared to the previous three months due to mixed performances across sectors.

Chart Overview

The attached chart illustrates the contributions of major sectors to GDP growth in November 2024. It highlights the positive performances of the services and construction sectors against the persistent decline in production.

Future Outlook

Given the modest GDP performance, the UK economy is expected to face continued pressure in the coming months. Key challenges include:

1. Global Demand Decline: Particularly amid persistent global inflationary pressures.
2. Political and Economic Changes: These could impact investor confidence.
3. Focus on Domestic Investment: To boost production sectors and reduce reliance on imports.

Despite these challenges, the UK economy maintains relative stability due to its diverse sectoral structure. Strengthening economic policies that promote innovation and productivity could be key to fostering stronger growth in the future.

Technical Analysis of GBP/USD

General Trend

The overall trend remains bearish in the short term. However, the current stabilization near the up- trendline may limit the downside until the trendline is broken, increasing selling pressure. The price is currently trading below the moving averages (MA), indicating bearish momentum.

Support and Resistance Levels

• Key Resistance: Positioned at 1.23195 (marked in red). Breaking above this level could signal a bullish move.
• Primary Support: At 1.22116, where the price is currently testing for stability.
• Secondary Support: At 1.21031, a critical level if the decline continues.

Technical Indicators

1. MACD:
   • Red bars indicate strong bearish momentum, but shrinking bar sizes suggest weakening pressure.
2. RSI:
   • Trading below the 50 level, signaling continued bearish control. However, a reversal above 50 could support a potential recovery.

Potential Scenarios

1. Positive Scenario:
   If the price rebounds from the 1.22116 support level with positive signals from MACD and RSI, a bullish move towards 1.23195 could occur.
2. Negative Scenario:
   Breaking below the 1.22116 support would confirm the bearish trend, targeting the next support at 1.21031.