This article is from a previous week. Visit the UK sightlines to see the most recent projections.

The week ahead 29 January 2024 - UK business activity stronger than expected

The Week Ahead 29 January 2024

What to watch out for in the UK economy and property market this week.

Last week saw better-than-expected PMI figures for the UK, which improved confidence on the outlook for 2024. The convention of the PMI, an index based on a survey of businesses commenting on trading conditions, is that a reading of over 50 points to growth. The composite figure for January was 52.5, up from 52.1 in December. This was the third month in a row that the index was above the pivotal 50 mark. However, the figures also showed growth came overwhelmingly from the Services sector, as manufacturing firms struggled. Separately, the latest GfK index showed UK consumer confidence increased in January, probably due to the steady decline for inflation lately. The latest PMI and GfK figures have strengthened our belief that 2024 will be a turning point year, marking the commencement of a new cycle both for the UK economy and the real estate market.

Turning to international news, the US Q4 GDP figures took everyone by surprise, with the economy growing by 3.3% quarter-on-quarter on an annualised basis. This was well ahead of the consensus forecast of 2.0%. Growth was driven by rises in consumer spending and government expenditure. Overall, 2023 was a better-than-expected year thanks to investment in new semiconductor factories and green infrastructure. It does look increasingly like a ‘soft landing’ for the US economy – whereby the Fed succeeds in taming inflation without causing a recession – has been achieved. Meanwhile in the Eurozone, the ECB held its policy meeting last week, and left interest rates unchanged. However, comments made at the subsequent press conference were interpreted as being ‘dovish’, prompting speculation in the financial markets that the first ECB rate cut may come as soon as April.

This week’s major economic news story is the Bank of England’s interest rate announcement on Thursday. It is unlikely there will be any change to the Base Rate, however the financial markets will be listening carefully to what is said at the subsequent press conference for any clues on how far away the first rate cut will be.

Things to watch for this week

Tuesday, January 30th

Eurozone GDP, q-on-q, Q4 2023

Previous: -0.1%
Forecast: -0.1%

Based on survey evidence, we are expecting a moderate decline in GDP to be reported for Q4.

Thursday, February 1st

Bank of England Rate Decision, February 2023

Previous: 5.25%
Forecast: 5.25%

Given inflation is still well above the 2% target level, we are predicting the Bank will leave the Base Rate unchanged for now.

Eurozone Inflation, y-on-y, January 2024

Previous: 2.9%
Forecast: 2.8%

Despite the uptick in December, we believe Euro Area inflation resumed its downwards trend in January.

Friday, February 2nd

US Non-Farm Payrolls, January 2023

Previous: 216k
Forecast: 170k

It is our forecast that high interest rates encouraged many US firms to seek cost savings by hiring fewer staff in January, resulting in a fall in the payroll figures.

+44 (0)20 7911 2580