NIESR Monthly GDP Tracker - Little Relief Expected for Households with GDP Set to Contract by

Interestingly, monthly output in consumer-facing services fell by 1.2 per cent in December following growth of 0.4 per cent in November; the ONS associates this surprise with the gains to food and beverage activity from the FIFA World Cup being overtaken by a 17 per cent loss in sports activities, and amusement and recreation activities due to the break in the Premier League. [...] That said, businesses optimism rose in all three sectors as a softening in the rate of energy inflation and ‘tentative’ signs of a turnaround in sales prospects emerged in the new year, possibly signalling that the ongoing terms of trade shock will be both temporary and short in duration. [...] This led us to estimate GDP growth of 0.1 per cent in the fourth quarter of 2022, expecting the seasonal consumption boom to drive growth relative to the sluggish third quarter which saw a contraction in GDP of 0.3 per cent. [...] Today’s data indicate that negative surprises in the services sector caused a monthly fall in GDP of 0.5 per cent in December, while GDP remained flat in the fourth quarter of 2022 relative to the third quarter. [...] Our first estimate of growth for any particular quarter starts in the first month of that quarter and is then updated each month until the first official release in the second month of the following quarter.