Economic Commentary October 2024

The Economic Commentary provides a regular update on global, UK and Scottish economic trends, drawing on recent economic data as well as feedback from businesses.

The methodology consisted of desk research.

• Global business activity growth slowed to an eight-month low in September. Across major economies, the US, the UK and Japan showed the strongest growth while the eurozone business activity contracted.
• Global business activity is being driven by the service sector as manufacturing output contracted in many major economies including the US, China, Japan and the eurozone.
• The UK economy returned to modest growth in August (+0.2%) following zero growth in June and July. The Scottish economy grew by 0.3% in July, after zero growth in June.
• UK business activity rose across almost all nations and regions in September, but growth eased. Business confidence generally eased.
• In Scotland, business activity grew for the 9th consecutive month in September, but at a slower pace than August. Output is being driven by the service sector as manufacturing contracted.
• Scotland’s unemployment rate fell by 1 percentage point over the year to August to 3.9% (UK, 4.0%), and the employment rate fell by 0.5ppts to 73.7%, below the UK (75%). Worker shortages and recruitment difficulties remain an issue for businesses.
• Headline UK consumer price inflation eased to 1.7% in September, down from 2.2% in August and below the Bank of England’s 2% target for the first time since 2021.
• Scottish Enterprise customers are generally more optimistic than this time last year and taking forward investment plans. The main challenges continue to be accessing skills and property, and input costs.
• The Organisation for Economic Co-operation and Development (EOCD) is forecasting global economic growth of 3.2% in both 2024 and 2025, as falling inflation, improving real incomes and less restrictive monetary policy underpin demand.
• The Fraser of Allander Institute is forecasting 0.9% GDP growth in 2024, rising to 1.1% in 2025 and 1.2% in 2026. Although this is an upward revision to previous forecasts, the Institute notes that stalling growth over recent months highlights ongoing economic fragility which will dampening growth potential in the medium-term.

The paper makes no recommendations.