On Tuesday we received figures for the labour market which showed a weakening economy. Sometimes the labour market is ahead of the output or GDP numbers as for example we saw in 2012/13. But this morning the GDP numbers disappointed as well.
Monthly GDP is estimated to have fallen by 0.1%, following no growth in August 2025 (revised down from a growth of 0.1% in our previous publication) and an unrevised fall of 0.1% in July 2025.
As you can see there was a fall in September and the recent sequence sees either declines or downwards revisions. In fact if you are willing to look an extra decimal place all the numbers are negative. Now they are not that accurate and frankly are not accurate to 0.1% either but the mood music here is clearly sombre.
Jaguar Land Rover
We get a pretty strong hint of the impact of the cyber attack here from this and the emphasis is mine.
On the month, production output is estimated to have fallen by 2.0% in September 2025, following a growth of 0.3% in August 2025 (revised down from a growth of 0.4% in our previous publication). This is the largest monthly fall since January 2021.
Output in all production subsectors decreased in September 2025, mainly driven by manufacturing output, which fell by 1.7%……. largely because of a fall in the manufacture of motor vehicles, trailers and semi-trailers.
Eventually the Office for National Statistics got to the point.
mainly because of a 28.6% decline in the manufacture of motor vehicles, trailers and semi-trailers, which detracted 0.17 percentage points from monthly GDP.
So you can see why I have begun by looking at this area as the shut down of JLR had a big impact on the UK economy which might otherwise have shown 0.1% GDP for September rather than -0.1%.
If we look elsewhere in the production numbers we see more bad news for the policies of both the recent governments we have had.
Electricity, gas, steam and air conditioning supply fell by 3.4%, mining and quarrying fell by 3.4% and water supply; sewerage, waste management and remediation activities fell by 0.7%.
We prefer to have Norway drill for our has supply rather than do it ourselves and have prioritised unreliable sources of electricity supply.
Services
These did their best to offset the above.
Services output is estimated to have grown by 0.2% in September 2025. This follows a 0.1% fall in August 2025 (this has been revised down from no growth in our previous publication). In September 2025, 8 of the 14 subsectors showed growth.
Along the way here we get another critique of the monthly numbers because do we really believe a 0.1% fall is followed by a 0.2% rise? But let us cross our fingers and hope so.
The Society of Motor Manufacturers and Traders (SMMT) reported this was the best September for new car registrations since 2020. …….This was mainly driven by a 1.7% rise in wholesale trade, except of motor vehicles and motorcycles. Wholesale and retail trade and repair of motor vehicles also grew, by 3.4%, its largest growth since April 2023.
If we stay with positives then my locale can take some credit for the next bit as since the end of the summer there has been quite a bit of filming in Battersea Park.
Information and communication also contributed to services growth in September 2025, with output increasing in this subsector by 0.8% in the month. The growth in September 2025 was mainly driven by motion picture, video and TV programme production, sound recording and music publishing activities, which grew by 5.4%.
On the other side of the coin there was this.
The largest negative contribution at the subsector level in September 2025 came from professional, scientific and technical activities where output fell by 0.9%. This fall was driven by a 4.9% decrease in scientific research and development.
Although both the main movers challenge the use of monthly GDP numbers when we have rises and falls of the order of 5%.
Construction
We are told that there was a rise here.
Monthly construction output is estimated to have grown by 0.2% in September 2025.
Which was driven by this.
The increase in monthly output in September 2025 came solely from an increase of 0.7% in new work, as repair and maintenance decreased by 0.5% on the month. At the sector level, the main contributor to the monthly increase was private commercial new work, which grew by 2.5%.
There may be some hope for the government’s house building target of 1.5 million homes over this parliamentary term in the latter sentence. But as was discussed in the comments section last night via the figures from Taylor Wimpey it is an area where they look to be struggling. Also we know that the official series is frequently heavily revised on a quarterly basis further undermining the monthly numbers.
Third Quarter GDP
The consequence of the above is that we eked out some marginal growth here.
UK real gross domestic product (GDP) is estimated to have increased by 0.1% in Quarter 3 (July to Sept), compared with growth of 0.3% in Quarter 2 (Apr to June) 2025.
That means that in 2025 so far we have gone 0.7% then 0.3% and now 0.1% which is a pretty clear trend and presumably why the social media response from Chancellor Rachel Reeves does not mention today’s figures at all.
We had the fastest-growing economy in the G7 in the first half of the year, but there’s more to do to build an economy that works for working people. At the Budget I’ll take the fair choices to cut waiting lists, cut national debt and cut the cost of living.
Actually events have evolved pretty much in the opposite direction to her claims. If we stay with the UK establishment it has not been the best of days for the Bank of England either.
Incorporating the bounce-back in trade volumes, Bank staff expected headline GDP to increase by around 0.4% in 2025 Q3, slightly stronger than the underlying trend in growth. ( September Minutes)
The downbeat message is confirmed by the number I am most frequently asked about.
Real GDP per head is estimated to have shown no growth in the latest quarter and is up 0.8%, compared with the same quarter a year ago.
So there was no growth on a personal level this time around. Nor was there in productivity..
Output per worker growth was 0.0% in Quarter 3 2025 compared with the same quarter a year ago. This is because GVA increased at a similar rate to the number of workers (1.3% and 1.2%, respectively).
The breakdown in terms of sectors is below.
In output terms, growth in the latest quarter was driven by increases of 0.2% in services and 0.1% in construction; the production sector fell by 0.5%.
Inflation Problems
Today’s numbers also confirmed why this went well yesterday.
The United Kingdom Debt Management Office (DMO) announces that the syndicated reopening of £4.25 billion (nominal) of 1¾% Index-linked Treasury Gilt 2038 has been priced at £99.065 per £100 nominal, equating to a gross real redemption yield of 1.8319%. The transaction will settle, and this tranche of the gilt will be issued, on 13 November 2025.
There was record demand of over £60 billion I believe. I am not concerned with the exact number just the principle or theme as I now move to today’s release.
Compared with the same quarter a year ago, the GDP implied deflator grew by 3.8% in Quarter 3 2025 mainly driven by household expenditure, general government and exports.
This is a signal that inflation is persisting in the UK economy as whilst the annual reading is lower than last time’s 4.1% it is above the 3.5% we saw at this time last year. So investors are looking for protection against this inflation persistence. On today’s evidence we can see why.
Comment
As you can see economic growth has slowed substantially in the UK even if we allow for JLR and boost the quarterly number to 0.2%. If we add in the boost from all the extra government spending we are left wondering if that is pretty much what we are seeing in total?
Central government’s current expenditure was provisionally estimated as £90.6 billion in September 2025, £8.1 billion (or 9.8%) more than in September 2024.
Then there is the issue of inflation which the GDP Deflator confirms is persisting. It is a fluke that it is the same number as the official CPI measure at present. But again there is a theme here of inflation being higher than our peers and persisting. Or if you prefer this is what is called Stagflation.
