Top 3 Economic Stories this Week

ONS Labour Market Overview Released

The Labour Market Overview came in this week from the Office for National Statistics, and unemployment indicators suggested a gradual weakening of the UK labour market. The Claimant Count - which is measured by the number of people receiving unemployment benefits - rose once more in September, continuing the upward trend in the unemployment measure. This statistic rising not only shows the scale of unemployment in the UK worsening, but it further displays the increasing pressure on our welfare funds, an area that will arise in conversation before the upcoming Autumn Budget. Furthermore, those not working and not seeking work (economically inactive), also stayed heightened, specifically in the age group of 16-24 year olds and those over 50. Economists have implied that the data does show signs of a loosening labour market (especially with more individuals looking for work), which could support the BoE's case for an interest rate cut in the months ahead. Once more, bringing the question back to the budget, employment remains a key issue in the UK - it feels almost paradoxical as of late. Many in the UK question why it feels impossible to become employed, yet so many businesses operate understaffed. Some analysts would argue that the problem is a reflection of a greater business uncertainty issue.

Eurozone Industrial Production Slows

Last week we covered Eurozone consumption weakening, this weak its the output that seems to be the issue. Eurozone industrial production for August 2025 fell 1.2% MoM, which acted as its first decline in three months. YoY - wise, output remained up by 1.1% which analysts have suggested was caused by earlier strength in energy and a substantial output of capital goods. In the Eurozone, the largest declines came from Germany and the Netherlands - similarly to last week in their consumption statistics - as demand for machinery and transport equipment dwindled in these nations. However, some of this was offset by gains in the Southern Europe, as their demand stayed strong. Economists have also suggested the situation was worsened by weaker demand externally, from Asia and the US. The European commission has noted that industrial activity has remained volatile.

Monthly GDP Estimate Data

Even more ONS data this week - as the Monthly GDP Estimate was released! UK GDP growth matched expectations as it climbed by 0.1% MoM in August 2025. In terms of sector growth - here are the scores on the doors. An increase in manufacturing output in pharmaceuticals and transport equipment led the production sector to a 0.4% increase in growth, while services output was fairly flat - as some analysts suggested that slower retail weighed down the sector in August. We interpreted steady but slow-moving growth in the 0.2% increase in GDP growth over the latest rolling three month period, and economists described the data as "anaemic but positive", with the weakness in domestic-demand worrying some.

Policy Pulse: IMF World Economic Outlook

More reports coming in as the IMF published their World Economic Outlook this week. The organisation projected 2025 global growth to be 3.2%, staying around the same as their mid-year outlook. The report stated that advanced economies are expected to expand by about 1.5% - which was a slight decrease from 2024 growth. Despite the geopolitical risks present globally which may hinder global growth, the global average continued to be driven by the emerging markets of India and ASEAN countries. The IMF seemed confident in their report that inflation should ease in 2026, but of course - central banks will continue to consider inflation when making their monetary policy decisions, such as cutting rates.

Industry Spotlight: Services and Manufacturing

Weak household spending and demand within the UK meant that UK services output remained stagnant, with service firms reporting only marginal growth which was driven mainly by the financial sector. Business surveys unexpectedly displayed business confidence declining, but 2026 expectations seemed to improve on the hope of further BoE interest rate changes. In terms of manufacturing, those in the industry depending on European exports saw declining orders after sluggish business activity in EU factories. UK industrial companies may struggle competitively as higher energy costs and a stronger pound earlier in the quarter weighed on exports.