State of the economy: May 2022

Scottish Output

Scotland's economy has continued to recover at the start of 2022 with output from consumer facing services growing as Covid restrictions have eased.

The start of 2022 has seen the removal of Covid restrictions which had been tightened during the Omicron wave, and the remaining Covid legal requirements for businesses and services providers, while international travel restrictions for people coming to Scotland has also ended.

In February, Scottish output grew by 0.4% (UK: 0.0%) and GDP is now 1.3% above its pre-pandemic level in February 2020.^[2]

Growth in February was driven by the services (+0.7%) and production sectors (+0.3%) while construction sector output fell (-0.1%).

Within the services sector, there continued to be a strong pick-up in growth from consumer facing services which increased by 2.1% over the month in February. This was driven by 8.1% growth in the Accommodation and Food sector, which has been supported by the gradual removal of restrictions since the start of the year. Elsewhere, in the service sector, output in Health, Education and Public services fell by 1.2% during February as activity around Test and Trace eased back (though the industry remains 4.4% above its pre-pandemic level) while output in all other services grew by 1.3%.

Output across the production sector grew by 0.3% in February and eased back to 3.4% below its pre-pandemic level of February 2020. Growth was driven by electricity and gas supply (+4.7%) which tends to be volatile on a monthly basis and offset smaller falls across the sector, with manufacturing output falling 0.6%. Output in the construction sector is estimated to have fallen by 0.1% and in the agriculture sector, output fell by 8.1%. Activity in this group of industries continues to be adversely impacted by ongoing global supply chain disruptions, impacting the cost and availability of materials.

More recent UK GDP data indicates that the UK economy contracted by 0.1% in March driven primarily by a fall in services output where wholesale, retail and repair of vehicles fell by 15.1% and emphasises the ongoing challenges to growth at the end of the first quarter. Equivalent data for Scotland will be published on 1 June.^[3]