Outlook and appraisal [June 1989]

Recent production data suggest that the Scottish economy grew at a similar rate to the UK in 1988. However, in the fourth quarter of last year Scottish production fell while UK production rose. Revised employment data reveal that employment growth during 1987 and 1988 was much more buoyant than previously estimated. Jobs growth in the Scottish economy now more clearly reflects the estimated changes in output and unemployment. The evidence from the latest business surveys is consistent with the expectation that growth in the Scottish economy - as in the British economy - will slow during 1989. Retail sales, wholesaling and construction activity still remain fairly buoyant and perhaps more so than in the UK. But the short-term outlook for manufacturing appears less sanguine, which, when coupled with the recent rise in interest rates and increased inflationary pressure, reduces the prospect of a 'soft landing' in both Scotland and the rest of the UK.