Today saw the publication of a plethora of outturn data and survey findings on the Scottish economy. The main outturn data were the official third quarter 2011 GDP figures, the manufacturing export index for the third quarter and labour market statistics for September-November. The survey data refer either to the final quarter of last year or December. I shall focus in this post on the official outturn data.
The basic picture continues to be one of weak recovery with a further weakening apparent towards the end of 2011.
GDP grew by 0.5% in the third quarter identical to UK growth, compared to 0.2% in both the second and first quarters. While this rate of growth is close to the trend rate of growth it is weak for the recovery phase of the business cycle.
The chart shows that Scottish GVA now stands at -3.3% below the pre-recession peak, while the figure for UK GVA is -3.6%. However, while the depth of the recession was greater in the UK than Scotland, the recovery of UK GDP has been slightly faster than in Scotland.
At the broad sectoral level services (0.9%) and manufacturing (0.6%) were the main drivers of third quarter growth. Indeed, the Scottish performance was stronger than in UK services (0.7%) and UK manufacturing (0.1%). So some comfort from a Scottish standpoint can be drawn from the latest data. But the performance of both sectors was weaker in Scotland over the year. Moreover, the construction sector was much weaker in Scotland in the third quarter contracting by -1.2% compared to an increase of 0.3% in the UK. It is worth noting, though, that over the year the performance of Scottish construction was slightly better with growth of 5.9% compared to 5.4% in the UK.
Manufacturing exports grew by 0.2 per cent in real terms during the third quarter of 2011. But this represented a weaker performance than the second quarter, which in turn was weaker than the first quarter.
In the labour market the weakening continued as net job creation fell and unemployment rose, both at a faster rate than the UK. Employment fell by 8,000 and unemployment rose by 19,000 in the quarter and by 5,000 and 7,000, respectively over the year. The rate of job loss and unemployment increase was greater than in the UK. There was some net job creation in the UK (18,000) despite the rise in unemployment of 118,000 and percentage rise in unemployment of 9% in Scotland compared to 5% in the UK. The weakness of the jobs recovery is underlined by the following chart:
The Scottish labour market is -3.56% below its pre-recession peak compared -1.41% in the UK. Moreover, when we allow for the growth of working population we see that the ratio of jobs to the supply of labour has hardly recovered at all as shown by this chart.
With unemployment now standing at 231,000 (8.6%) this is little different from the level of unemployment of just under 237,000 (8.8%) at the bottom of the recession in the labour market in May-July 2010. Furthermore, Scotland's strong unemployment position compared to UK regions has slipped a bit as this chart shows:
Further analysis of the latest GVA and labour market data will be provided in the Fraser of Allander Institute's Economic Commentary which we expect to publish at end February/early March.
Brian- congratulations on the blog which I'm already finding an invaluable resource. One probably rather daft question; in working out the employment to working age pop ratio,what source do you use for working age population?
Posted by: Stephen Boyd | 18 January 2012 at 08:15 PM
Stephen,
Thanks for your supportive comments.
I do not have a direct source for Scottish working population. However, I compute it for each quarter by taking - from the ONS Regional Data release for Scotland - the number economically active, dividing into it the economic activity rate, then multiplying by 100.
Brian
Posted by: Brian Ashcroft | 18 January 2012 at 09:08 PM