This blog provides the June 2017 update from our nowcasting model for Scotland.
- Our nowcast for GVA growth in 2017 Q1 is 0.22% which, at an annual rate, is 0.87%
- Our nowcast for GVA growth in 2017 Q2 is 0.23% which, at an annual rate, is 0.94%
These results represent a downward revision relative to last months update. In the context of weak economic performance over recent quarters, this suggests that there is little reason to be optimistic about the short-term performance of the Scottish economy.
Looking at the some of the indicators that underpin our model, it is worth making a few comments.
Firstly, the latest Bank of Scotland Purchase Managers Index (PMI) for Scotland registered a value of 50.57. This is down on the average PMI for the first three months of the year which came in at 51.02. It is worth remembering that any value above 50 indicates some degree of positive sentiment, with a larger value representing even stronger growth sentiment/expectations. For comparison, the equivalent measure for the UK in May 2017 was 56.7.
Secondly, retail sales by volume fell for the second quarter in a row (down -0.4% in Q1). This is, notably, the first time since Q1 and Q2 of 2012 that this has been the case. The recent decline in Scottish retail sales largely mirrors a similar fall in GB retail sales (which were down by -1.4% in volume in Q1). However, comparing over the last year (i.e. the most recent data to the same measure the year before) GB retail sales grew by 2.1% while Scotland only grew by 0.2%.
Thirdly, and on a (very slightly!) more positive note, the GfK consumer confidence index showed a slight improvement in Scotland to a value of -13. While still negative, it is slightly less negative than it was. The equivalent UK index has also improved and continues to remain less negative (-5) than Scotland. Remember that weak consumer confidence has persisted in Scotland since 2015, this isn’t a short term fluctuation.
It is widely accepted that recent economic growth in Scotland has been very disappointing. Based on our model results, and examination of some of the underlying data series, there appears little reason to expect to see a substantial improvement in the economic performance of the Scottish economy through the first 5 months of the year when further official data are released in due course.