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U.K. economy rebounded more than expected in October, but recession looms

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The U.K. economy swung to expansion in October as services activity was boosted by an additional working day after September’s bank holiday, but activity is set to take a downturn in the months ahead.

The U.K.’s gross domestic product grew by 0.5% in October on month after a 0.6% contraction in September, according to data from the Office for National Statistics released Monday.

The reading beats the 0.4% expansion expected from economists polled by The Wall Street Journal.

The monthly expansion was led by the services sector driven by gains in the wholesale and retail trade, while manufacturing output expanded by 0.7% on month, the ONS said. The economy was also partly boosted because the number of working days normalized in October after September’s holiday due to the Queen Elisabeth II’s funeral.

However, GDP declined 0.3% in the three months through October, more than the 0.2% contraction in the quarter to September.

The U.K. economy is widely expected to slide to a recession due to the cost-of-living crisis, rising price pressures and high uncertainty. GDP is expected to contract by 0.3% in the fourth quarter, and by another 0.3% in the first and second quarters of 2023, according to a consensus forecast from FactSet.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

Credit: marketwatch.com

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