THE Scottish economy contracted by 0.1% in the fourth quarter of last year, but fared better than the UK as a whole, as the services sector north of the Border achieved modest growth.

Scotland's slight outperformance of the UK as a whole, which suffered a 0.3% drop in gross domestic product (GDP) in the final three months of last year, was revealed in data published yesterday by the Scottish Government.

However, Scotland was slightly adrift in terms of growth over the whole of 2011. Scottish GDP rose by 0.5% last year, the latest data showed, compared with a 0.6% advance in the UK as a whole on the same gross value-added measure.

The latest Scottish GDP figures were published as data from the Office for National Statistics showed that employment in Scotland on the International Labour Organisation (ILO) measure rose by 17,000 to 2.484 million between the September to November and December to February periods.

ILO unemployment, meanwhile, fell by 12,000 to 219,000 between these three-month periods.

Scottish GDP had risen by 0.4% during the third quarter of 2011.

Brian Ashcroft, emeritus professor of economics at Strathclyde University and economics editor of the respected Fraser of Allander Institute commentary, said of fourth-quarter Scottish GDP: "It is broadly as expected: Weakening in the fourth quarter, not dramatic, likely to be carried into the first quarter, but with a bit of luck maybe the first quarter might get by with being flat, or a relatively small increase."

Scotland, like the UK as a whole, will have dodged renewed recession if it turns out to have avoided a second consecutive quarter of contraction in the opening three months of this year.

Mr Ashcroft, who described the Scottish employment figures as "encouraging", had expected the movement in GDP north of the Border in the fourth quarter would be "broadly comparable" with that in the UK as a whole.

He added that this meant the Scottish GDP numbers were "marginally better than one might have expected", but cautioned: "I wouldn't push too hard on that front because 0.1% and 0.3% is not too different."

Mr Ashcroft said it was "highly possible" there might be a pick-up in the Scottish economy later in the year, as consumer prices index inflation fell.

The 0.2% rise in services output in Scotland in the fourth quarter contrasted with a 0.1% contraction in this dominant sector of the economy in the UK as a whole. This growth in the Scottish service sector was enabled by a 0.6% rise in output of the business services and finance sub-sector.

Mr Ashcroft said: "Services needed to pick up here. The UK (as a whole) has been doing better on that front."

Comparing the whole of 2011 with 2010, services sector output was up just 0.4% in Scotland but by 1.6% UK-wide.

Manufacturing output slid sharply in Scotland in the fourth quarter. A 0.6% fall in manufacturing output north of the Border was only slightly less steep than a 0.7% drop in the UK as a whole.

There were drops in output in Scottish manufacturing in the food and tobacco sub-sector, and in textiles, clothing and leather products, in metals, and in the refined petroleum, chemicals, and pharmaceuticals category.

However, the engineering and allied industries enjoyed a 1.9% quarter-on-quarter rise in their overall output in the fourth quarter of last year.

This was driven by a 4% quarter-on-quarter increase in the output of the electrical and instrument engineering sub-sector, which includes Scotland's key electronics industry, and a 2.2% rise in the transport equipment category.

Output of the overall Scottish production sector was flat between the third and fourth quarters as a 5.3% jump in electricity and gas supply offset the fall in manufacturing output. Electricity and gas supply fell by 5.3% UK-wide in the fourth quarter.

The construction sector performed much more poorly in the fourth quarter in Scotland than in the UK as a whole. Construction output dropped by 2.7% quarter-on-quarter in the final three months of last year in Scotland, but fell by only 0.2% UK-wide.

Jeremy Peat, director of The David Hume Institute economic think-tank, told The Herald: "One can see signs of growth edging towards 1% to 1.5% in 2012, after a very difficult three or four years."

Official data yesterday showed that Scottish manufactured export sales in the fourth quarter of last year were flat, compared with the previous three months.