The U.K. economy posted surprise growth in November as the tight job market increased demand for employment services and football's World Cup boosted hospitality, reducing the chance that the country has already slipped into recession, despite a gloomy broader picture for 2023.
Gross domestic product (GDP) rose 0.1% in November from October, figures from the Office for National Statistics (ONS) showed on Friday, stronger than the average forecast for a fall of 0.2% in a Reuters poll of economists.
Despite the better-than-expected figures, the ONS says monthly GDP estimates should be treated with caution because they are more volatile than quarterly data.
During the three months to the end of November, the economy shrank by 0.3% in line with economists' forecasts, but this was driven by a 0.6% fall in output in September when many businesses closed to mark Queen Elizabeth's funeral.
"The economy grew a little in November with increases in telecommunications and computer programming helping to push the economy forward. Pubs and bars also did well as people went out to watch World Cup games," ONS statistician Darren Morgan said.
November's expansion was driven by a 2% growth in administrative and support activities, with employment services growing 2.1%, the ONS said. Overall, service industries account for about 80% of the British economy.
Consumer-facing activities expanded 0.4% led by a 2.2% jump in food and beverage services as the soccer World Cup got underway.
Growth in the service sector offset a 0.2% decline in the output of production industries, the ONS said.
Manufacturing declined 0.5% in November and construction activity stagnated in the month.
The stronger-than-expected November growth means there will need to have been a fairly sharp fall in output in December for Britain to record two consecutive negative quarters of GDP, which are commonly used as a definition of recession in Europe.
The ONS said December's GDP would need to drop by about 0.5% for fourth-quarter growth to be negative when rounded to one decimal place, assuming no other revisions.
"The UK economy is doing its best to avoid falling into a technical recession with another month of growth in November ... (but) it doesn't change the fact that it is likely to be an extremely painful year for the economy," said Ed Monk, associate director at Fidelity International.
Consumer price inflation hit a 41-year high of 11.1% in October and the squeeze on living standards has yet to ease, while the government's budget watchdog forecast in November that output would fall by 1.4% in 2023.
Finance Minister Jeremy Hunt said after the GDP data that "the most important help we can give is to stick to the plan to halve inflation this year so we get the economy growing again."