Today the Scottish government published GDP data for the second quarter and the ONS published jobs and unemployment data for quarter June - August.
On any criteria, the new data do not make encouraging reading, with output falling, the number of jobs contracting and unemployment rising.
In this post, I shall focus on GDP and output, leaving a discussion of the labour market to a later post.
GDP in constant prices fell by 0.4% in Scotland during the quarter, the same loss of output as in the UK. We currently have available only the rounded data but on that basis we get the following chart
Both the Scottish and UK economies have contracted for the last three quarters. This is clear evidence of a recession, although thankfully not as steep as 2008-09. We wouldn't expect it to be as steep of course. Because what we are experiencing is effectively an aftershock of that Great Recession.
Over the year, the Scottish economy has experienced zero growth compared to slight growth of 0.4 per cent in the UK. It seems unlikely that there will be much improvement in that annual growth by the time we reach the end of the year, unless there is a mini-boom in output in the second half of the year. However, all the indications are, from surveys and casual empiricism, that that will not happen.
One issue that stands out from the latest Scottish data is the weakness of the production sector here. Output fell by 3.8 per cent compared to a fall of 0.7 per cent in the UK. The key reason for this was that the performance of Scottish manufacturing weakened considerably in the quarter and that was mainly due to a fall in production in the engineering sector, specifically Electronics (-5.5%), Textiles, Leather & Clothing (-3.8%), Other Manufacturing Industries including Repair (-3.1%), and Refined Petroleum, Chemical & Pharmaceutical Products (-2.4%).
The service sector did a little better here (+0.2% against -0.1% in UK) and construction bounced back (+2.0% against -3.0%) from the large fall experienced over the year. But, on an annual basis both services and construction have performed less strongly here than in the UK as a whole.
A final point on output is that the Scottish recovery is flattered by the statistical quirk that the UK figures include all of oil production whereas the Scottish data do not. With oil production weak this has affected the Scottish-UK GDP relative as John McLaren at CPPR pointed out as I reported here. As the chart excluding oil and gas production, and incorporating the latest data, shows, the Scottish recovery from the Great Recession has been weaker than the UK.
We are still a little over 4 per cent below the pre-recession peak in early 2008 with the UK still 3 per cent below.
On the latest evidence it will be many quarters yet before we return to that peak. And readers of this blog know why!
(More detailed analysis of Scottish GDP, the labour market and future prospects will be provided in the Fraser of Allander Institute, Economic Commentary, which will be published on 7th November.)