The week ahead 23 December 2024 - Bank of England leaves Base Rate unchanged

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

Evidence continues to mount that central banks are planning to cut interest rates more gradually than was previously assumed. Last week saw the US Federal Reserve reduce its policy rate by 25 bps, however their forecast for rate cuts next year was reduced to 50 bps, down from 100 bps back in September. The Bank of England opted to leave the UK Base Rate unchanged at 4.75% after an increase in headline and core inflation was reported for November. Our full analysis on the Bank of England interest rate decision can be found here.

Last week also saw the early ‘flash’ PMI survey for the UK in December released, which provided more proof the economy is in a slowdown. The composite PMI remained unchanged at 50.5, which suggests the commercial side of the economy is still growing but at a sluggish pace. As in previous months, there was a marked contrast between the relative performances of the services and manufacturing sectors. The services PMI rose from 50.8 in November to 51.4 in December. However, the manufacturing PMI slid from 48.0 in November to 47.0 in December. Many major economies are also seeing this underperformance by manufacturing.

Turning to real estate news, the latest UK MSCI monthly index suggests that commercial property may be heading towards a moderately positive finish for 2024. The all property capital growth index increased by 0.4% month-on-month in November, up from 0.2% in October. The industrial sector led the way with an increase of 0.7%, followed by retail at 0.4%. Offices however saw a decline of -0.2%. Eventually, the recent slowdown in the economy will impact the property market data, and therefore we are predicting a deceleration for the MSCI figures in the coming months.

Inevitably this week will be a very quiet one for economic news. Today sees the release of the third revision of the Q3 GDP figures, but we expect the data to remain unchanged from the 0.1% that was reported at the second revision, as most indicators confirm the economy slowed during the summer. Tomorrow, the US will publish durable goods orders which we believe will confirm that demand for manufactured goods remains weak.

This week's figures

MONDAY 23 DECEMBER

UK GDP, q-on-q, Q3

0.5% previous
0.1% forecast

Most data published so far covering the Q3 period has pointed to a marked slowdown for the economy, so we are forecasting no change to the 0.1% figure reported at the second revision.

TUESDAY 24 DECEMBER

US Durable Goods Orders, m-on-m, November

0.2% previous
-0.3% forecast

Given the subdued global picture for manufacturing, we are predicting a contraction for durable goods orders.

WEDNESDAY 25 DECEMBER

Christmas Day 2024

Turkey previous
Turkey forecast

Merry Christmas and a Happy New Year to all.