Scottish manufacturers slow down compared to UK

Posted on 10 Apr 2015 by The Manufacturer

Growth in the Scottish manufacturing sector stalled for sales within the UK market in the first quarter, a survey has revealed.

This stagnation was in stark contrast to continuing significant growth in domestic sales for the manufacturing sectors of other nations and regions within the UK, according to the survey published today by British Chambers of Commerce.

The survey does signal a slowing of growth in manufacturing and services activity in the UK as a whole in the first quarter, raising further questions about the momentum of an economic recovery which British Chambers says is still too reliant on consumer spending.

However, Scotland stands out in terms of the sharp slowdown in growth of UK sales suffered by manufacturers north of the border in the first quarter.

Liz Cameron, chief executive of Scottish Chambers, highlighted better news on the export front for manufacturers in the opening three months of the year and a surge in their confidence about profitability over the next 12 months. She also noted solid investment trends in the Scottish manufacturing sector.

Cameron noted that Scottish services companies were not as confident about future profitability as manufacturers, but they were still expecting progress on this front.

Subtracting the proportion of firms reporting a fall from that experiencing a rise, while adjusting the findings to give larger companies a greater weighting, British Chambers’ survey of first-quarter activity shows a balance of only 2% of Scottish manufacturers achieved a rise in sales within the UK.

This signals that growth in Scottish manufacturers’ domestic sales all but ground to a halt in the first quarter. A weighted balance of 29% of manufacturers in Scotland had recorded a rise in UK sales in the final three months of last year.

And a weighted balance of 1% of Scottish services companies recorded a fall in domestic sales in the first quarter.

In the latest survey, a weighted balance of 4% of Scottish services companies reported a fall in employment over the last three months. This was in contrast to a weighted balance of 41% having recorded a rise in staffing in British Chambers’ survey of activity in the fourth quarter of last year.

However, the latest survey signals the rate of growth of employment in the Scottish manufacturing sector accelerated sharply in the first quarter, with a balance of 25% recording a rise in staffing.

And Scottish manufacturers enjoyed a dramatic turnaround in their exporting fortunes in the first quarter, according to the British Chambers survey.

Respective weighted balances of 49% and 44% of Scottish manufacturers reported rises in export sales and overseas orders in the latest survey.

In the previous quarterly survey, respective weighted balances of 23% and 12% of manufacturers in Scotland reported falls in overseas sales and export orders.

Ms Cameron said: “The Q1 2015 results of our quarterly economic indicator provide reasons to continue to be optimistic. The growth of UK sales for manufacturers was muted, but exports increased significantly compared with the last two quarters.”

She added: “Although there was a further deterioration of cash-flow balances, investment trends have been positive and, generally, pressure to increase prices seems to have fallen. Expectations of the coming year’s income and profitability are extremely promising amongst manufacturing firms.”