State of the economy: September 2019

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 contracted in Q2 2019 for the first time since 2012.

  • UK GDP contracted by 0.2% in the second quarter of 2019 and grew 1.3% over the year.
  • Manufacturing output fell 2.3% in Q2 2019, reflecting the unwinding of stock building ahead of the original Brexit deadline and widespread car firm shutdowns in April.
  • GDP grew 0.3% in the month of July 2019 however remained flat over the 3-months with falls in manufacturing (-0.5%) and construction (-0.8%) output offsetting service sector growth (0.2%).

Employment rate at record high in May-July 2019.

  • UK employment rate rose over the year to 76.1%, its joint highest on record, with 32.8 million people in employment.
  • UK unemployment fell to 3.8%, its joint lowest rate since 1974.
  • The inactivity rate remained unchanged over the quarter at 20.8%, however has fallen by 0.5 p.p over the year.
  • GB regular pay continued to strengthen into the second half of 2019 growing 1.9% over the year to July (up from 1.5%).
  • Labour productivity fell by 0.2% over the year to Q1 2019; its third consecutive quarter of contraction.

CPI inflation fell in August.

  • Inflation edged up in recent months to 2.1% in July, however fell back to 1.7% in August.
  • The fall in the rate was driven by a range of recreational and cultural goods and services, clothing and sea fares.
  • The Bank of England (BoE) forecast inflation to remain above target at 2.1% and 2.2% in 2020 and 2021.

UK GDP growth is forecast to slow in 2019.

  • The BoE forecast GDP growth of 1.3% in 2019, with weaker global growth and Brexit uncertainty weighing on investment.
  • The IMF also forecast the UK economy to slow in 2019 to 1.3% before rebounding to 1.4% in 2020.
  • Both forecasts assume a smooth Brexit transition.

UK GDP Growth

UK Manufacturing: Stock Building

UK Labour Market

UK CPI Inflation & Intrest Rate

Contact

Email: OCEABusiness@gov.scot

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