State of the economy: February 2020

Report produced tri-annually by the Chief Economic Adviser to provide a picture of the Scottish economy in an international context.

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Scotland Summary

GDP growth rebounded in the third quarter of 2019.

  • GDP growth picked up to 0.3% in Q3 2019, having contracted in the second quarter, while growth slowed to 0.6% over the year.
  • In Q3 2019, services output grew marginally (0.1%) and production output rebounded (1.1%) while construction output remained flat (0.0%).
  • Manufacturing output fell further over the quarter (-0.3%), albeit more slowly than in Q2, as firms continued to navigate their way between the Brexit deadlines.

Labour market remains strong by historical standards.

  • Unemployment fell to 3.8% in September - November 2019, however has risen over the past year.
  • The employment rate increased over the latest quarter to 74.3%, however fell over the year by 17,000.
  • Full time employment fell by 14,000 over the year, while parttime employment fell by 1,000.
  • The inactivity rate rose over the quarter and year to 22.7%.
  • Earnings grew 2.4% in 2019, however there are signals that the pace of growth has slowed.
  • Business and consumer sentiment remain subdued.
  • The RBS PMI reported a mild increase in business activity at the start of 2020 supported by an increase in new orders and business confidence. However, indicators remain subdued by historical standards.
  • Consumer sentiment in Scotland picked up in Q4 2019 from a record low at the start of the year, however remains negative and notably below the series average.

GDP growth is forecast to strengthen.

  • The SFC forecast the Scottish economy to grow 1.0 in 2020, rising to 1.1% in 2021, with further earnings growth expected to support household consumption.
  • Brexit uncertainty, weak productivity growth and weaknesses in the global economy remain downside risks.

Scotland GDP Growth

Scotland Labour Market

Scotland Output Levels by Sector

RBS Purchasing Managers' Index: Business Activity



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