Monthly economic brief: March 2022

Output

Scotland's GDP rebounded in January following the fall in December at the start of the Omicron wave.

• The Omicron restrictions introduced in December were eased over January enabling the resumption of large outdoor events, the removal of physical distancing restrictions in hospitality and leisure settings and working from home guidance.
• Reflecting this, Scotland's GDP grew by 1.1% in January (UK: 0.8%), and rebounded from the 0.4% fall in December at the start of the Omicron wave.^[1]

• At a sector level, growth was broad based in January with the services sector growing by 0.9%, and the production and construction sectors by 1.8% and 1.1% respectively. However, the stage of recovery continues to vary across and within sectors.
• Within the services sector, output in consumer-facing services grew by 3.6%, rebounding from its 3% fall in December. Its output remained 1.5% below pre-pandemic levels, however has risen to its highest level since the start of the pandemic.
• In other parts of the services sector, health, education and public services output increased by 0.8%, in which the strong contribution from health is a reflection of the higher levels of test and trace and vaccination activity in response to the Omicron variant, while output from all other services increased by 0.1%. Output from health, education and public services is 6.5% above its pre-pandemic level, and output from all other services is 0.2% above.

• The growth in production in January (1.8%), was driven by the manufacturing sector (3.8%) which, following a fall in output over the second half of 2021, picked up at its fastest rate since January 2021.
• Overall output in the broader production, construction and agriculture group first returned to its pre-pandemic level in June 2021 before falling back over the third quarter, driven by volatile output across the manufacturing, construction and electricity and gas supply subsectors. Output in this group grew by 1.7% in January, however remained 2.1% below its pre-pandemic level.