Monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in January 2025, mainly caused by a fall in the production sector, after growth of 0.4% in December 2024, data from the Office for National Statistics (ONS) has revealed.
Real GDP is estimated to have grown by 0.2% in the three months to January, compared with the three months to October 2024, mainly because of growth in the services sector.
Monthly services output grew by 0.1% throughout the month, following growth of 0.4% in December.
It increased by 0.4% in the three months to January.
In addition, production output fell by 0.9% in January, following growth of 0.5% in December.
It fell by 0.9% in the three months to January, with manufacturing output driving both the monthly and three-month falls.
Construction output fell by 0.2%, following a fall of 0.2% in December, but grew by 0.4% in the three months to January.
Reaction:
Nicholas Hyett, investment manager at Wealth Club:
“This is not the news the Chancellor would have wanted before this month’s Spring Statement, with the economy shrinking when it had been expected to show modest growth.
“The slowdown has been driven by a big slowdown in manufacturing output – unsurprising given the very uncertain outlook for exports with ever changing tariffs.
“Services too has slowed dramatically, particularly in sectors like accommodation and food services which expect to be hit hard by higher living wage and employer national insurance contributions in April.
“That’s the really worrying thing about these numbers. Tariffs and increased labour costs were more worries than reality in January, the month covered by these numbers.
“Those worries will soon be transforming into realities. That leaves plenty of room for economic growth to deteriorate further, with far fewer catalysts to spark an economic recovery.
“We could be at the start of a long slow slide into recession.”
David Morrison, senior market analyst at fintech and financial services provider, Trade Nation:
“According to the latest figures from the ONS, monthly real GDP is estimated to have fallen by 0.1% in January.
“This looks to mainly have been caused by a fall in the production sector, after growth of 0.4% in Dec 2024.
“However, real GDP is estimated to have grown by 0.2% in the three months to January, compared to three months to October 2024 due to a growth in the services sector.
“The market reaction was muted, with shallow pullbacks in both sterling and pre-open FTSE 100.
“The latter is firmer this morning, taking its cue from an overnight rally across US stock index futures.
“The British pound is lower against the US dollar. But this represents some mild profit-taking following sterling’s sharp rally so far this month given overall dollar weakness.
“President Trump’s tariff strategy has sown confusion and uncertainty across financial markets.
“Unfortunately, this situation looks set to continue until the US president achieves his aims or comes to some sort of accommodation with his trading partners.”
