State of the Economy: June 2018

Scotland Summary

GDP growth picked-up in 2017 and continued into 2018.

• Following a pick-up in growth in 2017, GDP grew 0.2% over the quarter in Q1 2018 and 0.8% over the year.

• Both the Service sector and the Production sector supported growth in Q1 2018, growing 0.4% and 0.9% respectively.

• Construction sector output contracted for the ninth consecutive quarter in Q1 2018, contracting 3.5% over the quarter.

• Scotland attracted 116 FDI projects in 2017, rising 7% compared to 2016.

Labour market continues to perform strongly in 2018.

• Over the quarter to Feb-Apr 2018, the unemployment rate remained unchanged (4.3%), having risen slightly in the second half of 2017 from its record low of 3.8%.

• The employment rate rose over the same period to 75.2%, with 2.64 million in employment, 18,000 higher than a year previously.

• The inactivity rate fell over the quarter and the year to 21.4%, slightly above the UK rate of 21.0%.

Productivity growth remains weak in Q4 2017.

• Trend growth in productivity (output per hour worked) increased by 1% in Q4 2017, however fell by 1.9% on a rolling annual basis.

• The fall in productivity over the year reflects that growth in hours worked (2.7%) outpaced GVA growth (0.8%).

GDP growth outlook remains subdued for 2018 and 2019.

• Business surveys signal that business optimism has held up into the start of 2018, with firms’ outlook for output and activity remaining broadly optimistic.

• Scottish consumer sentiment remained in negative territory in Q2 2018 (-2.4) having weakened over the quarter.

• Independent GDP growth forecasts for 2018 range between 0.7% and 1.3%, strengthening slightly to between 0.8% and 1.6% for 2019.