The US economy grew at an annualised rate of 2.8% in Q3 2024, down from 3% in Q2 and below forecasts. Personal spending surged by 3.7%, driven by a 6% increase in goods consumption and steady growth in services and while government spending rose by 5%, net trade showed only a slight improvement.

In October, the US added only 12,000 jobs, far below expectations and the lowest growth since December 2020, likely impacted by hurricanes in Florida and labour strikes at Boeing. Job gains occurred in healthcare and government, but manufacturing and temporary help services lost jobs. The unemployment rate held steady at 4.1%.

Annual inflation slowed to 2.4% in September, slightly above forecasts. In September, the Federal Reserve cut the federal funds rate by 50 basis points to a target range of 4.75%-5%, signalling a cautious approach to managing inflation while supporting economic growth.

In the Eurozone, GDP grew by 0.4% in Q3 2024, the strongest growth in two years, up from 0.2% in Q2 and surpassing forecasts. Germany’s economy expanded by 0.2%, avoiding recession, while France (0.4%), Spain (0.8%), and Ireland (2%) experienced solid growth. However, Italy stalled, and Latvia continued to contract. Year-on-year, GDP rose 0.9%, the highest since Q1 2023.

The European Central Bank (ECB) cut its key interest rate by 25 basis points to 3.25% in October to support the economy, amid ongoing disinflation, as inflation fell below the 2% target for the first time in over three years in September.  Employment continued to decline, especially in manufacturing, with significant job cuts in Germany.

In the UK, the economy grew by 0.5% in Q2 2024, slightly down from initial estimates. Government spending and exports were revised lower, while investment exceeded expectations. Manufacturing activity represented by the Manufacturing PMI fell to 49.9, indicating contraction in factory activity, as new orders decreased, and businesses hesitated ahead of the budget.

On the services side, the UK Services PMI fell to 51.8 in October, below expectations, marking the slowest growth in the services sector since June. Despite resilient new business intake and a rise in export sales, firms reduced backlogs and laid off staff at the fastest rate in 13 months, while cost pressures from salaries and technology services increased. This is likely due to broad concerns over government policy, the economic outlook, excess capacity and cost-cutting pressures.

Global stock markets experienced declines in October, with the MSCI World Index dropping by 2.04%, the S&P 500 down 0.99%, and the Nasdaq falling 0.52%. In the UK, the FTSE 100 fell by 1.54%, while smaller companies fared similarly with the Small Cap Index down by 1.51%, the AIM All-Share Index down by 0.45% and the Fledgling Index declining by 2.8%.

Our portfolio declined by 1.0% during the month with the net asset value (NAV) down by 1.2% for the month after accounting for all expenses. Notable contributors to our performance included Treatt, Cake Box, and PayPoint, each of which saw share price gains of over 8% in October. We reduced our positions in Games Workshop, Londonmetric, PayPoint and Rightmove while increasing our stake in NWF. Cash holdings made up 1.9% of the portfolio at month end.