GROSS DOMESTIC PRODUCT FOR SCOTLAND FOR THE 3rd QUARTER OF 2008
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28 January 2009
A NATIONAL STATISTICS PUBLICATION FOR SCOTLAND
Gross Domestic Product in Scotland rose by 1.4 per cent over the year to the end of 2008 Q3 and fell by 0.8 per cent in the third quarter of 2008 according to provisional estimates released today by Scotland's Chief Statistician.
The main findings of the latest figures are:
· GDP rose by 1.4 per cent annually and fell by 0.8 per cent in the third quarter of 2008 (seasonally adjusted).
· In the year to end-September 2008, the Scottish service sector grew by 2.0 per cent, the production sector grew by 0.9 per cent and the construction sector fell by 3.4 per cent.
· In the third quarter of 2008, the service sector fell by 1.1 per cent, the production sector grew by 0.8 per cent and the construction sector fell by 1.0 per cent.
· The UK figures show that GDP rose by 1.9 per cent in the year to end-September 2008 and fell 0.6 per cent in the third quarter of 2008.
· Over the year, the UK experienced 2.4 per cent growth in services, 0.5 per cent fall in production and the construction sector grew by 2.4 per cent.
· In the third quarter of 2008, the UK service sector fell by 0.5 per cent, the production sector declined by 1.4 per cent and the construction sector declined by 0.2 per cent.
· In the third quarter of 2008, the service sector in Scotland fell by 1.1 per cent. Within services, retail & wholesale (-1.5%), other services (-1.0%) and real estate & business services (-3.7%) all experienced falls over the quarter. The financial services sector grew by 0.5 per cent along with modest growth being seen in public administration, education & health (+0.1%) and transport, storage and communication (+0.1%).
· Output in the production sector increased by 0.8 per cent in the latest quarter. Within production, manufacturing (-0.6%) and mining and quarrying (-1.4%) experienced falls in the latest quarter, whilst electricity, gas & water supply industry (+10.2%) grew over the quarter. Within manufacturing, chemicals & man-made fibres (+9.5%) grew and food, drink & tobacco (-0.3%) fell over the quarter. Engineering & allied industries fell by 2.3 per cent over the quarter, with growth of 0.1 per cent in mechanical engineering, and 0.4 per cent in transport equipment, while electrical & instrument engineering fell by 4.6 per cent. Metals and metal products was essentially flat (-0.0%) in the latest quarter while other manufacturing (-3.8%) and textiles, footwear, leather & clothing (-1.2%) fell over the period.
1. Gross Domestic Product (GDP) is a measure of the value added to materials and other inputs in the production of goods and services by resident organisations; before allowing for depreciation or capital consumption. Net receipts from interest, profits and dividends abroad are excluded. The estimates produced in this publication measure GDP at basic prices, also referred to as Gross Value Added (GVA).
2. Annual chainlinking is the technique used to compile the overall measure of GDP growth and also the other, lower-level published aggregates. The resultant indices represent changes in the value added, at constant prices, in the production of goods and services in individual industries. These industries are compiled using the standard industrial classification SIC2003.
3. In recent years, it has become the norm for the weights - used to produce the aggregate measures - to be updated each year in the quarter two publication. The Office for National Statistics delayed this process for the UK GDP statistics until their new National Accounts system is fully operational. The latest weights used to produce growth rates for Scotland in this publication continue to relate to the year 2004 whilst the weights used in the UK statistics continue to relate to the calendar year 2003.
4. This latest publication incorporates a revised series of Scottish weights for 1998 - 2004. These revised weights incorporate a new method of calculating the contribution of the financial services industry to the economy (further details below) and are also consistent with revised Input-Output Tables (currently in the final stages of production) which will provide, for the first time, a consistent time series of Gross Value Added weights along with other key macro-economic measures.
5. The data used in the production of these quarterly GDP estimates are seasonally adjusted using the X-12-ARIMA technique where appropriate to remove regularly occurring peaks and troughs so that the underlying trends and other features of the data are easier to identify. Further information about the seasonal adjustment of the GDP data can be found in section A3 of Scottish Economic Statistics 2006 ( www.scotland.gov.uk/stats/ses).
6. The main methodological change in this quarters estimates of GDP relates to the calculation and allocation of Financial Intermediation Services Indirectly Measured (FISIM). This has resulted in numerous long-run revisions to historical data. Further information about FISIM can be found in section A3 of Scottish Economic Statistics 2008 ( www.scotland.gov.uk/stats/ses).
7. The incorporation of the full FISIM adjustment into Scotland's economic statistics represents a significant improvement in the measurement of the interactions between the financial services sector and other sectors. The approach acknowledges the full scope of the industry by recognising, for the first time, the value generated in the economy through financial services' interactions with final consumers, notably households, government and exports. Through incorporation of the full FISIM adjustment, compliance with international National Accounts guidance has been improved and comparability maintained with economic statistics produced for the United Kingdom as a whole.
8. In light of recent merger activity within the banking industry, removal of banking as a separate published series will be considered following consultation with the Scottish Economic Statistics Consultants Group (SESCG).
9. It is hoped that recent development work carried out by the Information Services Division of the NHS Scotland and analysts in the Scottish Government's Health division towards estabilishing a direct measure of health service output will reach fruition and be ready for inclusion in the 2008 quarter 4 estimates of GDP for Scotland.
10. The Scottish National Accounts Project (SNAP) was officially launched at a recent meeting of the Scottish Economic Statistics Consultants Group (SESCG). There are two strands to this project:
o building on the annual Input-Output framework for Scotland to produce more up-to-date estimates of income, expenditure and production GDP in value terms; and
o using UK quarterly National Accounts and other data sources, to produce a greater range of balanced and consistent quarterly economic indicators for Scotland.
11. Further information may be found on the Scottish Government website: http://www.scotland.gov.uk/SNAP
12. Series are derived from indicators based on data from a wide range of sources. Examples include: deflated turnover, deflated production, the volume of a good or service sold or produced and, for some parts of the public sector, employee numbers.
13. The quarterly Scottish GDP estimates are published within 4 months (approximately 17 weeks) of the end of the quarter to which they relate.
14. The indices published within this Statistics Publication Notice are grouped according to the 2003 revised Standard Industrial Classification. The four broad groupings of industries are:
(a) agriculture, hunting, forestry & fishing;
(b) production - mining & quarrying industries; energy & water supply; and manufacturing, which includes: refined petroleum products & nuclear fuel; chemicals & man-made fibres; metal & metal products; engineering & allied industries; food, drink & tobacco industries; textiles, footwear, leather & clothing; other manufacturing;
(d) services - retail & wholesale; hotels & catering; transport, storage & communication; financial services; real estate & business services; public administration, education & health; other services.
15. Scottish GDP estimates will generally be less reliable than the estimates for the UK, primarily because the equivalent UK figures are produced by balancing 3 independent sets of estimates (Output (GVA), Income & Expenditure-based approaches). Furthermore, the survey data tend to be based on smaller numbers of units, making figures for Scotland more likely to be susceptible to statistical variance.
Cash Estimates of GVA
16. Estimates of the cash value of gross value added (GVA) at current prices for Scotland (and other regions of the UK) are produced by the Office for National Statistics. Estimates for 2007 were published on 12th December 2008. The ONS current price value estimates are methodologically different from the Scottish Government volume (constant price) index and are based on different data sources.
17. Very few statistical revisions arise as a result of 'errors' in the popular sense of the word. All estimates, by definition, are subject to statistical 'error' but in this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques, or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable 'errors' such as human or system failures, and such mistakes are made quite clear when they do occur.
18. The figures in this Statistics Publication Notice incorporate revisions to previously published estimates. Tables 8 - 13 identify the extent of revisions since the last publication in October 2008. Revisions are shown to one decimal place for total GVA and GVA excluding oil & gas. Revisions are shown to zero decimal places for all other sectors.
19. The incorporation of the full FISIM adjustment and revised Input-Output weights has lead to a general increase in growth from 2.0 per cent annual average growth (1998-2007) to 2.2 per cent in this latest publication.
The series most affected by revisions this quarter are:
· Financial Services - due to FISIM adjustment;
· Hotels and Catering - due to revisions to survey stratification;
· Other Services - due to revisions to company level data for a small number of companies;
· Electrical and Instrument Engineering - due to revisions to weighting methodology;
· Electricity, Gas and Water Supply - due to revisions to seasonal adjustment factors.
A number of other series are affected by revisions to a lesser extent. These are mainly due to revisions to input data, deflators and seasonal adjustment factors.
20. National Statistics are produced to high professional standards set out in the National Statistics Code of Practice. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
21. Detailed results for all industries are available to download from the Scottish Government website www.scotland.gov.uk/gdp.
Office of the Chief Economic Adviser
St Andrew's House
Edinburgh, EH1 3DG
Press Office: Tim Jays 0131-244-5122
Statistician: Andrew Mortimer 0131-244-3771