State of the economy: October 2018
Report produced tri-annually by the Chief Economic Adviser to provide a picture of the Scottish economy in an international context.
United Kingdom Summary
GDP growth rebounded in Q2 2018.
- UK GDP grew 0.4% in the second quarter of 2018, rebounding from 0.1% growth in Q1 2018.
- Service sector growth picked-up in Q2 to 0.6%, supported by faster growth in Distribution, Hotels and Catering and Transport, Storage and Communications.
- The Production sector contracted by 0.8% in Q2 with falling output in Manufacturing and Electricity and Gas Supply.
- Construction sector output rebounded in Q2, growing 0.8% following its contraction at the start of the year.
Unemployment remains low in 2018.
- Latest data for June - August show that the UK unemployment rate fell over the quarter and year to 4.0%.
- The employment rate eased slightly over the quarter but has increased over the year to 75.5%.
- The inactivity rate has fallen slightly over the past year to 21.2%.
- GB nominal and real regular pay growth has strengthened in 2018 growing 3.1% and 0.7% over the year to June-August.
- Labour productivity strengthened in Q2 2018, growing 1.4% over the year, its seventh consecutive quarter of growth.
CPI inflation remains above 2% target.
- The CPI inflation rate fell in September to 2.4%, down from 2.7% in August.
- Downward contributions to the rate came from food and drink alongside transport, recreation and culture, and clothing.
- The inflation rate remains below its recent peak of 3.1% in November 2017.
UK growth forecast to slow in 2018.
- Growth is forecast to slow in 2018 with the IMF forecasting growth of 1.4%, picking up to 1.5% in 2019.
- The slower growth outlook reflects weaker output data at the start of 2018 alongside uncertainty over the terms of the EU withdrawal weighing on private sector activity.
UK GDP Growth
![UK GDP Growth UK GDP Growth](/binaries/content/gallery/publications/report/2018/10/state-economy/00542391.gif)
UK Labour Market
![UK Labour Market UK Labour Market](/binaries/content/gallery/publications/report/2018/10/state-economy/00542392.gif)
UK Labour Productivity
![UK Labour Productivity UK Labour Productivity](/binaries/content/gallery/publications/report/2018/10/state-economy/00542393.gif)
UK CPI Inflation & Interest Rate
![UK CPI Inflation & Interest Rate UK CPI Inflation & Interest Rate](/binaries/content/gallery/publications/report/2018/10/state-economy/00542394.gif)
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