State of the economy: April 2020

Scotland Summary

Business activity falls at sharpest recorded rate in March.

• Scotland PMI business survey for March reported that private sector business activity in Scotland declined at the quickest rate since the survey began in January 1998.
• The contraction in business activity was sharpest in the service sector, however the manufacturing sector also saw it sharpest fall in output since 2009.
• The Fraser of Allander Institute Business Monitor reported that 89% of Scottish businesses state that their turnover has been impacted since the beginning of March due to COVID-19.
• It also reported that 54% of firms said they could survive under current levels of trading for 'less than three months' while a further 32% said they could survive for 'four to six months'.

Business surveys signal falls in staff levels in March.

• Over the past few years, Scotland has had near historic high levels of employment and low unemployment.
• Latest PMI business survey data for March signal that private sector staffing levels fell at their sharpest rate since 2009.
• The Scottish Jobs business survey for March reported the steepest decline in permanent staff appointments since April 2009, while temporary billings fell at the quickest pace on record.
• Universal Credit (UC) claims (out of work/low income benefit) rose sharply in March and April. Over the two week period to 7 April, new claims for UC increased by around 61,000 in Scotland.

Scotland's GDP could fall by 33%.

• Scottish Government analysis shows that GDP could fall by around 33% during the current period of social distancing.
• The fall in output could be spread over March and April (that is over both Q1 and Q2).
• The estimates at a Scottish level are similar to those by the OECD and OBR.