Monthly economic brief: December 2022

Output

Economic output fell in September and over the third quarter as a whole.

• The Scottish economy contracted by 0.6% in September, and by 0.2% over the third quarter of 2022, weakening further from flat growth (0.0%) in the second quarter.^[1]
• The contraction over the third quarter is in line with UK GDP (-0.2%) and reflects a stalling in growth as the economy has faced increasing and elevated inflationary pressures over the course of the year.

• Part of the fall in output in September (and therefore over the third quarter) was due to the additional bank holiday for Her Majesty The Queen's funeral, during which many businesses closed or operated differently. The Office for National Statistics estimate that at least half of the UK GDP fall in September was due to the bank holiday.^[2]
• However, the fall in output also reflects the wider economic challenges from the increasing cost of living caused by energy and food price rises affecting household disposable income. Services growth was flat (0.0%) over the quarter in which consumer facing services fell 0.1%. There are also indications that supply side challenges continue to impact the production sector (-1.0%) in which manufacturing output fell 0.8% over the quarter, while construction output fell 0.3%.