Scottish employment growth beating UK

Scotland’s economy may be outperforming the UK economy with the largest growth in employment in the union, according to an economics consultancy.

However, employment growth may be unsustainable as it is centred around health and social care, rather than manufacturing, financial or professional services, a report by Capital Economics said.

House prices in Scotland are also falling at a time when they have continued to rise across most of the UK, according to Capital Economics’ UK Cities and Regions Chart Book for July.

It states: “Once again the Labour Force Survey is banging the drum for Scotland, with a large reported fall in unemployment and a large rise in employment.

“A month ago the employment increase was set at 2.2% and this month it is nearly as strong, at 1.9%, for the period February-April on November-January.”

Sustainability

The report uses two indices to measure employment across the UK, with one showing stronger employment growth and the other almost equal growth with the UK with a similar picture for Scotland’s economic output.

It says: “Overall, therefore, it seems reasonable to infer that Scotland’s economy has been at least keeping pace with the UK as a whole, and possibly outperforming.

“One possible cause for concern is that it looks as if what growth there has been has come from increased employment in support services and in health and social care, rather than from manufacturing, financial or professional services. This balance is not great in terms of the future sustainability of the growth.

“A second reason for anxiety is that the ONS house price index was 0.4% lower in April than it was in March. However, this may just reflect movements in very local markets.”

It concludes: “The Labour Force Survey is particularly strong with respect to Scotland, but other data are not so positive and it seems unlikely that Scottish growth is much ahead of UK growth.”