The UK economy is not in quite as bad a place as had been thought, new figures from the Office for National Statistics showed on Thursday morning, with economists saying it reduces the likelihood of an interest rate cut next month.
UK GDP rose by 0.3% in November, beating market expectations of 0.1% and easing fears of a contraction in the fourth quarter.
The increase followed a 0.1% decline in October and an upward revision for September to 0.1%.
Services output was up 0.3% in November, while industrial production climbed 1.1%. A key driver was a sharp rebound in automotive production, which rose 25.5% month-on-month following disruption earlier in the year linked to a cyber-attack at Jaguar Land Rover.
The services sector performed better in November following a weak October, said ONS director of economic statistics, Liz McKeown.
She said the manufacturing industry has "now largely recovered" but construction output fell 1.3% with the contraction in its three-monthly rate the largest in nearly three years.
Pantheon Macroeconomics economist Rob Wood calculated that GDP was "on track" to grow by 0.2% in the fourth quarter, above the Bank of England’s forecast of 0% growth.
He said: "Looking through the volatility, GDP has been trending up very gradually in recent months."
Deutsche Bank's Sanjay Raja added: "What a difference a month makes."
Last month, he had warned of a fourth-quarter contraction, but upward revisions have "shifted expectations meaningfully".
He said the stronger-than-expected data "should raise the bar for a February rate cut" from the Bank of England's monetary policy committee (MPC), though labour market and inflation figures coming up next week will be more decisive for monetary policy.
"With the economy now on a firmer footing than expected, the impetus to accelerate rate cuts is likely lower," Raja said.
Looking ahead, Wood said he saw "a good chance" that GDP growth in the first quarter of 2026 improves to 0.4% quarter-on-quarter, "as uncertainty ahead of the Budget has passed while any residual seasonality in the data favours a rebound in the New Year".
"Growth is weak by historical standards, but it seems to be only a little below the UK’s now reduced potential once we look through the volatility caused by Budget chaos and September’s cyber-attack, which should limit the emergence of spare capacity and keep the MPC cautious."
Other economic commentators were more sceptical.
Julian Jessop, economics fellow at the free market think tank the Institute of Economic Affairs, said the recent GDP numbers show how monthly data can be volatile.
"The economy still contracted in five of the eight months to November, leaving trend growth barely above zero," he said.
"The persistent weakness in consumer and business confidence and in the more timely survey data – notably in the retail and construction sectors – confirms that underlying growth remains weak."
Andrew Wishart at Bereneberg said it will be "hard to achieve" the consensus forecast for GDP growth of 1.1% this year, requiring a rebound in quarterly GDP growth to 0.4% throughout 2026.
"Admittedly, GDP has followed a seasonal pattern of surging in H1 before plateauing in H2 in recent years. However, fiscal consolidation amid declining employment will prevent the economy making a strong start to 2026, in our view.
"Instead, we suspect the economy will stagnate for a little longer as rising joblessness directly lowers household income and encourages those in work to keep saving a large share of their income for fear of redundancy."