Growth in manufacturing jobs boost Scottish economy

Posted on 10 Mar 2014 by Victoria Fitzgerald

A strong increase in Scotland's manufacturing and service sectors has raised employment at its fastest rate in 16 years according to the Bank of Scotland.

The latest Bank of Scotland purchasing managers’ index (PMI) survey, published today, shows employment hitting its highest figure since the report started, as well as, continued prosperity in the private sector.

February’s index result was 56.2, down from 57.2 in January.

Chief economist at the Bank of Scotland Donald MacRae said: “February’s PMI showed the private sector of the Scottish economy continuing to demonstrate strong growth.

“The rise in employment was the steepest in 16 years of the survey, while the improvement in new work was particularly strong among service businesses.”

MacRae added that the results reported suggest the Scottish economy is gaining enough growth momentum to return to its mid-2008 pre-recession high.

Experts said that increased labour costs helped increase input prices in February, compared with an average reduction in cost inflation across the UK.

The rise means Scottish firms now face a backlog of work for the ninth month running.

The survey comes at the same time as a report from the Federation of Small Businesses (FSB), which revealed Scotland’s small business confidence to match the UK average.

This year’s Scottish confidence index reached +36 in the first quarter, slightly higher than the UK average of +35.7 and a 15 point increase since the last measurement.

A boost in confidence will see Scottish business expand over the next year, with 27.2 % planning to increase capital investment, and 7% aiming to add more staff.

Credit availability has also improved in Scotland. 12% of small businesses revealed that credit availability was good or very good, compared with 6.6 % reporting the same positivity in 2013.

The study also reported that 27% of firms blamed the skills gap as a barrier to growth.

Andy Willox, FSB’s Scottish policy convenor, said: “It is great news that Scottish small businesses are now as bullish as their counterparts elsewhere in the UK.

“We need to turn this vigour into growth and jobs – and we must see this trend continue for the remainder of the year.

“As trading conditions improve, it is vital that businesses are ready to cope with rising demand.

“Firms with a full order book for the first time in years may need help with working capital and growing businesses will need to find the right skilled staff.”