Lumps and bumps: Scotland's out-of-shape economy

At least the weather's been a bit warmer, so shoppers have splurged a little bit - on sandals, summerwear, skincare and slimming products. Also on 'athleisure'* (for which those slimming products should come in handy). So says the Scottish Retail Consortium, looking for a silver lining to a large cloud.

Total shop sales in May have been declining every month for more than two years. But there's not much else about Wednesday's outpouring of economic figures that's likely to cheer us up.

No, hang on. The unemployment numbers are down, and account for half of the total UK fall. So that's good, isn't it?

Well, up to a point. The other side of that coin is employment - the number of people IN work in the February to April labour market survey. And that's been heading in the wrong direction, at a much faster speed than the latest drop in job-seeker numbers.

It dropped by 48,000 (with some seasonal adjustment). It fell by more than that in the January-to-March figures published last month, suggesting the more recent part of the rolling survey, in April, wasn't as bad.

Added to a drop in unemployment of 11,000, this means the level of economic inactivity has risen sharply between November-January and February-April.

The economy is out of shape. It'll be quite a stretch to fit its lumps and bumps into the summer ranges of athleisure.

'Inactive'

The numbers as you drill down into this survey get quite small and unreliable, so what follows is expressed as "experimental" in the statisticians' lingo.

Insofar as we can trust them, they paint a fairly clear picture of older workers staying in the workforce. The "inactive" number, aged 50 to 64, barely budged in the year to April. Indeed, another report out on Wednesday warns that early retirement may become a thing of the past.

They also show that men are staying in the workforce, particularly in the older age groups up to 65. Out of that rise of 48,000, only 5,000 were male.

And among women aged over 50, the "inactive" number was stable. It was younger women who seem to have been falling out of the workforce at the fastest rate.

Between the February-to-April survey of 2015 and the one this year, the number of 16 to 24-year-old women counted as economically inactive (not in work, seeking work, or available for work) rose from 82,000 to 109,000.

Girls diverted

That's a rise in the share of that age group of women from 27% to 37%, in only one year. And it accounts for more than half of the rise in inactivity.

Why? The figures don't tell us, but the relative appeal of full-time education, compared with the workplace, may have something to do with it.

The number of girls leaving school in Scotland and finding a job aged 16 and 17 fell from 25,000 to 12,000 in only a year. That's nearly half of that cohort falling to only a quarter (though remember those sample numbers are getting really small).

If correct, they may have been discouraged from job-hunting by the substantial widening in the differential between the minimum wage for young people and those aged 25-plus.

Uncertainty

This is the context for the lowered forecast from the Fraser of Allander Institute. Last November, it said the economy was on course to grow 2.2%, in March, that was cut to 1.9%. It now looks like 1.4%, while the UK average forecast, last month, was for 1.9%.

At least that's better than the Scottish Item Club of economists, which cut its forecast to 1.2%.

Next year sees the same sort of thing happening - Fraser of Allander lowering the forecast from 2.2% to 1.9%, and then rising to 2% in 2018.

The Strathclyde University institute explains this downgrade is due to various factors - lower business confidence, weak investment, uncertainty about the outcome of the European Union referendum, struggling exports, the tailing off of public sector construction contracts and, of course, the oil and gas slump.

It joins others who have warned that there are really serious issues facing the Scottish economy, as the gap between Scottish and UK unemployment reaches its widest point for 12 years.

With only the service sector showing signs of growth, that growth is around a third of the UK rate - though there were some modest signs of improvement in April.

So what to do? Well, the question should be "how to do it?", according to the Fraser of Allander economists, noting there have been plenty "what do do?" strategies from Scottish governments since 1999.

"There needs to be more thought and debate on the (stand by for a horrible word) operationalisation and implementation of the promotion of innovation, enterprise, investment and skills formation in Scotland," says the Strathclyde report.

"It is not new strategies the Scottish economy needs, but clear insights and policy action on the implementation of Scotland's economic strategy."

Over to you, MSPs.

* 'athleisure' - in case you're wondering, it's gym-wear designed for use in and out of the gym. The word has made it into common usage and some dictionaries in the past year.