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GDP data January 2023

ended 12. March 2023

The latest GDP data has just been published, showing monthly real gross domestic product (GDP) is estimated to have grown by 0.3% in January 2023, after falling by 0.5% in December 2022. It was a mixed bag, with the services sector growing by 0.5% while construction contracted by a significant 1.7%. Key points below. Any thoughts on this data, or how it could impact (or already is impacting) the markets, Sterling, swap rates and Bank Rate, whizz them across ASAP as this story is BREAKING. The alert will be shared with local, trade and national media as a live feed so mind the language.

  • Looking at the broader picture, GDP was flat in the three months to January 2023.
  • The services sector grew by 0.5% in January 2023, after falling by 0.8% in December 2022, with the largest contributions to growth in January 2023 coming from education, transport and storage, human health activities, and arts, entertainment and recreation activities, all of which have rebounded after falls in December 2022.
  • Output in consumer-facing services grew by 0.3% in January 2023; this follows a fall of 1.2% in December 2022.
  • Production output fell by 0.3% in January 2023, following growth of 0.3% in December 2022.
  • The construction sector fell by 1.7% in January 2023 after being flat in December 2022.
  • There are no revisions to previously published data in this release.

6 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Most of this artificial growth can be put down to football. The unusual break in the season for the World Cup had a detrimental effect on the economy and the bounce we see in there numbers is down to clubs reopening and spending increasing. Without this stop-start, there would be a downwards trend in the economy that we would expect given the reams of bad data pumping out about the stagnation in productivity we are seeing. This won’t give Hunt much headroom for his budget next week.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
The drop in the construction sector growth remains a cause for concern in the GDP growth data. The housebuilding and construction sector employs a huge number of people and has a cascading impact on several other sectors including Banking and Financial Services, Mortgage Advisory, and the building raw materials trade.

Construction and housebuilding would certainly get a boost if there is greater certainty around SDLT and home ownership schemes, and landlord taxation in the Chancellor's Spring Budget which will drive further investment in the sector through the rest of the year.
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Premium
Mark Dyason
Owner at Edinburgh Mortgage Advice
The concern is the potential impact of this data on the housing market. With the uncertain economic outlook, potential buyers may delay their decision to purchase, causing a further slowdown in the market. Additionally, the contraction in the construction sector may be caused by a stalling in demand, putting further pressure on the housing market and prices.

This mixed bag of results has raised concerns about the economy's stability and the potential impact on the market.

In light of this data, potential buyers will need to exercise caution and carefully consider their options before entering the market. It is essential to have a thorough understanding of the economic climate and potential risks before making any significant financial decisions.
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Graham Cox
Director at Bridging Hub
The money markets have reacted positively to January's 0.3% growth in GDP with swap rates falling. That's good news for mortgages as fixed rate deals are priced off of swap rates. It's a surprisingly good number, mainly buoyed by the services sector. Construction continues to suffer, however, down an alarming 1.7%, reflecting lower demand due to house prices falling.
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Luke Thompson
Director at PAB Wealth Management
Although these figures are potentially better than we thought they would be at the tail end of last year there is still plenty of concern around the wider economy. The biggest concern is most definitely around inflation if this doesn't start to fall soon and as quickly as had been expected what does the Bank of England do? Further rate rises could make any recession potentially deeper but if the inflation figures stay stubbornly high this will be a massive drag on the economy as a whole.

With the housing market the start of this year has definitely been more positive than I had been expecting it to be and as long as the Bank of England doesn't have to keep raising rates I expect the market to continue as it has been in recent weeks.
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Benjamin Woodhouse
Co-owner at Balguard Engineering Ltd
The construction industry is itself a very mixed bag of performances too...

The housing sector is struggling with contracts being put on hold, completion dates sliding backwards and phases being mothballed. Testimony to this, Main Contractor Jarvis Contracting went into administration this week racking up substantial debts, putting additional financial pressure on an already stretched supply chain of subcontractors.

However, the commercial construction market in London is seemingly going from strength to strength; one high-profile build or regeneration program after the next is being announced, with ever more higher specifications, pushed by the architects' and clients' vision of a greener and carbon-neutral cityscape.