UK Macroeconomic Snapshot - Resilience in early 2024 with Mixed Prospects Ahead

The UK economy showed resilience in early 2024, with GDP growing by 0.6% in Q1 after contractions in the previous two quarters. GDP per capita increased by 0.4%, marking the first rise in two years. However, the BoE forecasts subdued growth of just 0.2% for Q2.


Inflation eased to 3.2% in March, and the BoE expects it to approach their 2% target soon. However, inflation may rise to 2.5% in the second half due to energy price adjustments.


The labour market also presents a mixed picture. Unemployment slightly rose to 4.3% in March, and a 22-month decline in job vacancies suggests potential loosening. However, economists are concerned about the accuracy of job vacancy data, as the low cost of online advertising may inflate numbers, meaning the decline in job vacancies may be even worse than the data indicates. Despite this loosening in the job market, wages were resilient as average wages increased in real terms by 2.1% including bonuses and 2.4% excluding bonuses even in the face of slowing inflation.


Overall, while the modest rebound in GDP and rising wages are positive indicators, the UK economy still faces an uncertain outlook with potential headwinds from a weakening labour market and global challenges.