GDP Monthly Estimate: May 2021
Gross Domestic Product (GDP) statistics measure the output of the economy in Scotland. These monthly estimates have been developed to help track the economic impact of the COVID-19 pandemic.
This publication is designated as experimental official statistics. This means that the statistics are still in development but have been released to enable their use at an early stage. All results are provisional and subject to relatively high levels of uncertainty.
Main Findings
Scotland’s onshore GDP is estimated to have increased by 0.9% in May as restrictions continued to ease, but remains 2.7% below the pre-pandemic level in February 2020.
Services sector output grew by 1.1% in May, with increases in eleven of the fourteen subsectors. The largest contribution to growth was from accommodation and food services, as most parts of the country saw a further easing of restrictions during the month.
Output in the production sector increased by 0.7% overall, with increases in the electricity and gas supply and water and waste management subsectors offset by falls in manufacturing and the mining and quarrying subsector.
Output in the construction sector is estimated to have decreased by 0.8%, in line with the UK as a whole, but is 1.1% above its pre-pandemic level in February 2020.
Important Information About This Release
These results are provisional and likely to be revised in the coming months as data sources are updated and methods are further improved.
Estimates of monthly GDP growth are inherently more volatile than quarterly or annual growth. In normal times it would be sensible to concentrate on the smoother rolling quarterly growth rate (latest three months compared to previous three months). However, at this time, results in this release are mostly presented in terms of monthly growth rates, or the cumulative change compared to pre-pandemic levels in February 2020.
All results are seasonally adjusted and presented in real terms (adjusted to remove inflation), and relate to Scotland’s onshore economy (which does not include offshore oil and gas extraction).
GDP increased by 0.9% in May, but remains 2.7% below pre-pandemic levels
Scotland’s onshore GDP (which does not include offshore oil and gas extraction) is estimated to have increased by 0.9% in May, with growth across many sectors of the economy as restrictions continued to ease for most parts of the country during the month. This is the fourth consecutive monthly increase in GDP, after output reached itsrecent lowest point in January when the second lockdown period was extended across mainland Scotland.
In May, output remains 2.7% below the level in February 2020, prior to the direct impacts of the COVID-19 pandemic, but is now 1.9% higher than the previous high point in October before restrictions began to be applied in the autumn.
Since the start of the Covid-19 pandemic the path of Scotland’s GDP has been broadly similar to the pattern seen across the UK as a whole, with the latest ONS estimate of monthly GDP for the UK, published on 9 July,showing an increase of 0.8% in May and GDP remaining 3.1% below the level in February 2020.
Since June 2020 there have been differencesin the way restrictions have been applied across different parts of the UK, including the use of regional measures within Scotland. Accounting for these different restrictions and the timing of their application has presented a challenge for processing some of the business survey data used for GDP, especially where firms operate across different parts of the UK. For this reason, there are particularly high levels of statistical uncertainty in some of the estimates at this time, particularly in industries such as accommodation and food services where policy has varied widely over time and in different places. Users should be aware that revisions are likely to be made as more data become available over the coming months and quarters.
Accommodation & food services made the largest contribution to growth in May
In May, overall output in the services sector grew by 1.1%, with increases in eleven of the fourteen subsectors. The largest contribution to growth was from accommodation and food services for the second month in a row, due to the further easing of restrictions on trading in the hospitality sector with the move to Protection Level 2 across most of mainland Scotland.
Output in the production sector increased by 0.7% overall, with increases in the electricity and gas supply and water and waste management offset by falls in mining and quarrying and manufacturing.
Output in the construction sector is estimated to have decreased by 0.8%, in line with the UK as a whole, but remains 1.1% above its pre-pandemic level in February 2020.
Production Sector
In the production sector, output is estimated to have increased by 0.7% overall in May, but remains 1.1% below the pre-pandemic level in February 2020.
In the latest month, output increased by 3.1% in the electricity and gas supply subsector following the end of maintenance work at large power stations. Output in this subsector is volatile from month to month, and is remains 12% below pre-pandemic levelsin the latest results. Output in the water and waste management subsector increased by 5.7% in May, and although it has been volatile over the winter is now 0.4% above pre-pandemic levels. Output in the mining and quarrying sector fell by 0.3% in May and remains 16.8% below February 2020 levels, mostly due to reduced demand for mining support services.
The largest part of the production sector is manufacturing, where output is estimated to have fallen by 0.6% in May, following very strong growth in March and April across a broad range of subsectors. Overall output in the manufacturing sector is estimated to be 3.9% above the level of February 2020. However, within the manufacturing sector there are wide variations between the trends seen in different industries, and the estimates can be quite volatile from month to month.
Most of the results for the production sector are estimated using monthly business survey data, or other monthly data sources such as electricity supply and demand. For many of the industries within the Production sector, results can be quite volatile from month to month even after accounting for regular seasonal variations.
Construction Sector
In the construction sector, total output is estimated to have fallen by 0.8% in May, in line with the UK as a whole. This follows a drop of 0.7% in April, but despite falling for the last two months construction output is still estimated to be back above the pre-pandemic level of February 2020 after strong growth of 2.6% in quarter 1 of 2021.
There is particular uncertainty in the estimates for construction sector output in Scotland at this time due to there being very limited short-term regional data on output in the industry. At present, provisional monthly output is estimated based on the results for Great Britain as a whole, and has been adjusted using data on the relative differences in uptake of the Coronavirus Job Retention Scheme and some data available from the Business Impact of Coronavirus Survey (BICS). These results will remain under review and be updated when any other relevant data becomes available.
Services Sector
Overall output in the services sector is estimated to have increased by 1.1% in May, but remains 3.3% below the level in February 2020 prior to the direct impacts of the COVID-19 pandemic.
The largest contribution to monthly growth was from the accommodation and food services subsector for the second month in a row, where output is provisionally estimated to have increased by 72.5% in April and a further 24.4% in May following the lifting of the stay at home restriction and phased easing of restrictions from April onwards. However, output is estimated to remain 27.6% below pre-pandemic levels, with ongoing restrictions on the sector still applying past the end of May.
In May there were smaller contributions to growth from the other consumer facing services sectors than in April, when there were high growth rates due to the easing of restrictions on businesses including non-essential retail and close contact personal services. Activity in the education sector is estimated to have contracted by 0.5% in May, after increasing strongly in previous months due to the resumption of in-school teaching, due to the increasing levels of COVID-related absence as the summer term progressed. The ONS has recently published updated information on the treatment of education output for UK GDP, which is the approach followed in these estimates as well.
Estimates for much of the services sector are based on monthly business survey data, including the retail sales inquiry, or other monthly data sources including passenger transport information. Since June 2020, specific adjustments and checks have been required to account for the different timings of re-opening in Scotland compared to England and Wales, and the subsequent new restrictions introduced across parts of the UK from October onwards. The methodologies used for these adjustments remain under review and will be updated and extended as other industries fall into scope and more data become available.
Estimates for Public Administration & Defence, Education and Health are mostly based on annual data sources which are normally forecast smoothly for Quarterly GDP. Specific adjustments have been developed to reflect the impact of COVID-19 on the provision of some public services, such as lower levels of education activity due to school closures. For changes in health service activity, provisional adjustments have been made which are broadly in line with the estimates of monthly GDP for the UK as a whole, and will be reviewed and revised over time as more data becomes available. There was a particular methodology challenge for the education sector in accounting for the school holiday period in monthly seasonally adjusted terms, because of the shift from schools operating with most pupils at home before the holidays and then returning to normal after the holidays. Initial estimates have been made which spread the level shift of this re-opening smoothly over the course of the holidays.
The Scottish Government has used similar methods to ONS to ensure comparisons can be made within the UK, but ONS also note that differences in the methods for estimating the output of health and education services across different countries mean GDP may be less internationally comparable during the COVID-19 pandemic and recovery than usual, so should be made with increased caution.
Revisions
Revisions to previous estimates are detailed in Table R1 on the downloadable tables.
Quarterly results in this release are still constrained to the GDP First Quarterly Estimate for 2021 Quarter 1 and are unrevised from the previous release. The monthly path within the quarter is open for revision though.
The estimate of growth for April has been revised down from 2.0% to 1.6%, with most of the revision accounted for a revision to the ONS monthly estimates for UK health activity, which we use as our short term indicator for NHS activity in Scotland. After accounting for the monthly fluctuations, the rolling quarterly growth rate (3 month on 3 month) to April has been revised up by 0.1 percentage points.
About These Statistics
Gross Domestic Product (GDP) is the broadest summary measure of economic activity, covering the activities of households, businesses and government as both producers and consumers.
Changes in GDP for the whole economy are estimated using the output of each industry. Monthly estimates have been developed as a faster indicator of the changes in output to help monitor the economic impact of the COVID-19 pandemic and policies in place to curtail its spread. These are intended to assist with analysis of the economy, including short term modelling and forecasting.
Further information on the data sources, methods, accuracy and reliability of these statistics can be found in the downloadable pdf publication.
Contact
Email: economic.statistics@gov.scot
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