Rise in demand for manufactured goods fuels Scottish recovery

Posted on 12 Aug 2013

Scotland's latest Purchasing Managers Index (PMI) figures reveal a rise in new orders from manufacturers close to its fastest rate since the Bank of Scotland began the survey in 1998.

Statistics for July this year show manufacturing and service sector firms took on new staff in July to meet the demand while outstanding orders have continued to grow. The Scottish PMI showed company managers were seeing strong growth in business activity during July.

It follows positive news last week for much of the UK economy across services, manufacturing, exports, retail and car sales. Despite growth in Scotland being sharp it was still below the UK average.

Donald MacRae, chief economist at Bank of Scotland, said: “The Scottish economic recovery continues. Both manufacturing output and services activity increased in the month, with services firms experiencing the fastest rise in new work in over 15 years.

“July saw a return to growth in new export orders for the first time in five months. Business confidence is clearly on the increase with employment rising for the eighth month in a row. The recovery will become even more embedded if firms build on this ten-month run by increasing investment.”

Another study of the economy showed productivity had returned to levels seen before the downturn, unlike the UK.

Gary Gillespie, the Scottish government’s chief economist, posted a positive outlook in his quarterly update on the state of the economy.

Positive news from across the UK economy and US were cited for the recovery gaining momentum and traction.

There remains continuing risk from weak growth in the Eurozone, which accounts for more than a third of Scotland’s international exports.

“The recent output growth and underlying nature of the recession in Scotland suggest the potential for Scotland’s recovery to gain traction throughout 2013 and the economy as a whole to return to pre-recession levels of output in 2014,” Mr Gillespie said.

“This growth will be required to see a sustained recovery in the labour market, particularly employment, and to support improvement in real wages.”