UK Economy Navigates Mixed Signals: Money Supply Contracts, Manufacturing Edges Up, and Housing Market Cools

By / / Breaking News

Key Takeaways

  • The UK's M4 money supply experienced a month-over-month contraction of 0.2% in October, reversing the previous month's growth.
  • The manufacturing sector edged into expansion in November, with the S&P Global UK Manufacturing PMI rising to 50.2, marking the first growth since September 2024.
  • The housing market showed signs of cooling in October, as mortgage approvals declined to 65.0K and net lending secured on dwellings fell significantly to £4.3 billion.
  • Consumer borrowing also decelerated, with net consumer credit dropping to £1.1 billion in October.

The UK economy presented a mixed bag of data in recent releases, with a notable contraction in the monthly money supply, a slight improvement in manufacturing activity, and a cooling trend in both the housing market and consumer credit. These figures provide a nuanced picture for policymakers at the Bank of England (BOE).

The broad measure of money supply, M4, saw a 0.2% month-over-month contraction in October, a significant shift from the 0.6% growth recorded in the previous month. Annually, M4 money supply growth also decelerated slightly to 3.5% in October, down from 3.6% (revised from 3.7%) in September. However, M4 excluding intermediate other financial corporations (IOFCs) showed a 3-month annualised increase to 4.7%, up from 4.4% (revised from 4.5%).

In a more positive development, the UK manufacturing sector recorded its first increase in activity since September 2024. The S&P Global UK Manufacturing PMI for November rose to 50.2, up from 49.7 in October, aligning with preliminary estimates. This reading, which is above the neutral 50.0 mark, indicates a return to growth for the sector, driven by improved domestic demand and a more moderate decline in export orders.

Meanwhile, the housing market exhibited signs of softening in October. Mortgage approvals for house purchases decreased to 65.0K, falling from 65.9K in September, although this was still slightly above the estimated 64.5K. Net lending secured on dwellings also saw a substantial drop to £4.3 billion in October, below both the previous month's £5.5 billion and the estimated £4.5 billion.

Consumer borrowing also experienced a slowdown. Net consumer credit in October fell to £1.1 billion, missing the estimated £1.3 billion and significantly lower than the previous month's £1.5 billion. On a year-over-year basis, consumer credit growth eased to 7.2%, from 7.3% (revised from 7.2%) previously.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.
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