Nowcast evaluation for 2015 Q1

Official estimates of the growth of the Scottish economy in the first quarter of 2015 (2015 Q1) have just been released and are available here. In line with our previous practice – see here for the evaluation for 2014 Q4 – we now evaluate our series of nowcasts for this quarter against the realised ‘actual’ GVA estimate. Note that the realised quarterly growth is first release, and – like much economic data – is likely to be revised in the future as more data on the performance of the Scottish economy in 2015 Q1 become available.

According to the realised growth estimate, the Scottish economy grew by 0.6% in the first quarter of 2015, or 2.4% on an annualised basis. This is the same growth rate as 2014 Q4, see here.

Based on our six nowcasts, we calculate a average absolute nowcasting error (AANE (explained in more detail below)) of 0.05 percentage points for the quarterly growth estimate, which gives an AANE of 0.22 percentage points based on the annualised estimates. These are slightly lower than our AANEs for 2014 Q4 (smaller numbers suggest better performance of the nowcasting model).

Our model is performing well, and our (unrounded) second and third nowcast estimates are remarkably close to the realised growth estimate (both equal 0.6 to 1 decimal place). In terms of timing, readers should note that our second Q1 2015 Nowcast estimates were released on March 1st (headed ‘March’ in the tables below) and uses data which were released during February, this is the standard estimation and release schedule for our Nowcasts. The fact that our estimates are so close to the official estimates highlights the advantages of this methodology both in terms of accuracy and timeliness. It also bears out what is reported in the working paper for this work, that the second and third nowcasts for any given quarter (both ‘in quarter’ nowcasts) are the most accurate.

For reference, we produced six nowcasts for 2015 Q1 with estimates (identified by month of release, with links to the blog post) of:

February March April May June July
0.70% 0.55% 0.57% 0.53% 0.52% 0.48%

Actual: 0.6%

Which at an annualised rate, gives estimates of:

February March April May June July
2.83% 2.21% 2.29% 2.12% 2.10% 1.93%

Actual: 2.4%

Average absolute nowcast error (AANE) is calculated as the average of the absolute differences between each of our nowcasts and the realised estimate for Scottish GDP for that quarter.