The UK economy grew by 0.5% in October 2022, rebounding from a fall of 0.6% in September, which was affected by the additional bank holiday for the State Funeral of HM Queen Elizabeth II, according to figures from the Office for National Statistics.
The figure was slightly higher than City forecasts for a rise of 0.4%.
Looking at the broader picture, GDP fell by 0.3% in the three months to October 2022 compared with the three months to July.
The services sector grew by 0.6% in October, after falling by 0.8% in September; the largest contribution to growth came from wholesale and retail trade, repair of motor vehicles and motorcycles, which rose by 1.9% in the month.
Output in consumer-facing services grew by 1.2% in October, after falls of 1.7% in September and 1.6% in August.
Production remained broadly flat in October, after growth of 0.2% in September; manufacturing was the only sub-sector to contribute positively to production in October, offset by negative contributions from electricity, gas, steam and air conditioning supply, and water supply, sewerage, waste management and remediation activities.
The construction sector grew by 0.8% in October; this was its fourth consecutive increase after growth of 0.4% in September, 0.6% in August and 0.2% in July.
Despite the increase in October analysts are expecting the picture to deteriorate in the rest of the quarter and into 2023 while the chancellor Jeremy Hunt said the UK’s economy was “likely to get worse before it gets better.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: “We think that GDP will fall by about 0.3% month-to-month in both November and December, leaving it down 0.2% on a quarter-on-quarter basis.
“Activity indicators from S&P Global, Lloyds and the CBI, as well as the extremely low level of GfK’s consumer confidence index, all are consistent on past form with falling GDP.”
Danni Hewson, AJ Bell financial analyst agreed. She said: “The story is unchanged, the economy is still shrinking and recession feels inevitable”.
Meanwhile the EY ITEM Club forecast that GDP is likely to be – at best – flat in quarter four, “with a good chance of seeing a second successive quarter-over-quarter fall.”