Weak UK GDP Highlights Fragile Economy While US Labor Market Holds and Manufacturing Faces Pressure
In the UK, official figures show that the economy has been weak and quite choppy over recent months. In the three months to July 2025, GDP grew by a modest 0.1 % in the quarter, slowing from stronger growth earlier in the year. Monthly data for June showed a bounce of growth after earlier declines in April and May, but the direction has not been robust, and separate reports suggest the economy actually shrank in October 2025 on both a monthly and three-month basis, with services flat and production struggling to contribute to growth. Over the past six months the trend has been one of sluggish performance, stalled momentum and some contractions rather than strong expansion. Economists generally expect another very small growth figure in the region of a few tenths of a percent as consumer spending and services activity remain subdued amid political and fiscal uncertainty. Overall, UK growth remains fragile and close to stagnation rather than showing clear acceleration.
Turning to the US weekly unemployment claims, the most recent data showed initial jobless claims rose slightly to around 208K, edging up from the prior week but still near relatively low levels compared with historical norms. The four-week moving average sat just over 211K, indicating some short-term volatility but no dramatic surge in layoffs. Ongoing claims, which capture people continuing to receive benefits, were around 1,914K, also at elevated levels but not spiking sharply. Labor market conditions have clearly loosened compared with the tight post-pandemic years, with job growth slowing and layoffs rising in some sectors, but layoffs are not climbing as fast as in deep recessions. The consensus expectation for today’s weekly claims was for a slight uptick around 215K.
For US regional manufacturing gauges, the Empire State manufacturing index from the showed a notable drop in December 2025. That month’s index came out below zero at around -3.9, meaning more firms reported contracting conditions than expanding ones, a sharp reversal from a healthy positive reading in November. Looking at the pattern over the last six months, the Empire State index swung between moderately positive readings and sharp declines, reflecting uneven sentiment among manufacturers in New York. Markets were watching for a small positive reading in January 2026, with forecasts around slightly above zero, but the trend still shows a sector facing headwinds rather than steady expansion.
Finally, the Philadelphia Fed manufacturing index, which surveys firms in the broader Third Federal Reserve District, was still deeply negative in the last release available, dropping to around -10.2 in December 2025 from much milder contraction the month before. That index has alternated between contraction and modest expansion over the past six months, but the most recent data show contraction in activity dominating. Readings below zero here generally point to slowing orders, production and business conditions among surveyed manufacturers.
Together these pieces of data suggest that the US labor market is cooling but not collapsing, regional manufacturing activity remains under pressure, and in the UK growth is weak and close to stalling. Economic releases due today are likely to show similarly cautious readings rather than sharp improvement across these indicators.
Analysis by Coach Angel
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