Monthly economic brief: September 2021

Output

Scotland's GDP fell 0.2% in July and is now 2.4% below its pre-pandemic level.

• Scotland's GDP fell 0.2% in July (UK: +0.1%) with 0.4% growth in services output offset by falls in production (-3.0%) and construction (-0.4%) output.^[1],[2]

• The fall in output in July follows five consecutive months of growth, which had been supported by a pick-up in manufacturing and construction output at the start of the year. In recent months, this has more reflected the gradual easing of restrictions to level 0 in July which enabled further growth in the services sectors, particularly in parts which had been required to close/reduce capacity earlier in the year.
• In the three months to July, Scotland's GDP grew 3.4%, however, similar to the UK as a whole, the pace of growth has been on a downward trend since April.
• In the services sector, consumer facing services such as accommodation and food (2.5%) and arts culture and recreation (2.8%) continued to grow in July though at a much more moderate pace than when restrictions were eased and businesses in the sector were initially permitted to reopen.
• The fall in production sector output was partly driven by a sharp fall in electricity output (-9.9%) after unusually low levels of generation from wind and hydroelectric sources during the summer. However, manufacturing output fell for a third consecutive month (-2.4%), while output in the construction sector fell by 0.4% (its fourth consecutive month of falling output), with both sectors facing supply chain challenges.

• Scotland's GDP is gradually returning to its pre-pandemic levels. As at July, Scotland's GDP was 2.4% below its pre-pandemic level in February 2020, having fallen 22.8% below in April 2020. However there remain significant differences across sectors in the pace of recovery, which continues to partly reflect the restrictions that have been in place earlier in the year.

• Output from some sectors across services and production are back above pre-pandemic levels. For example, professional, scientific and professional services (8.5%) and manufacturing (1.6%). However, consumer facing services sectors which have been most impacted by recent restrictions such as households as employers of domestic personnel (-25%), arts, culture and recreation (-25%) and accommodation and food services (-15%), remain amongst sectors furthest below pre-pandemic levels.
• Furthermore, the general stabilisation of activity in services sectors following the easing of restrictions, alongside ongoing supply disruptions in the production and construction sectors and general fluctuations in the monthly data, mean that some sectors are currently moving around their pre-pandemic levels of output (above and below) and may continue to do so while these issues continue to stabilise.