Surveys point to upward trends
Election helps put firms back in growth
Scottish firms are in growth mode, according to two surveys. Bank of Scotland says private sector companies reported further growth of output and new orders at the start of the third quarter. Activity increased at the strongest rate in 2015 so far, while the pace of new order growth was little-changed since June.
The latest Business Trends Report by accountants and business advisers BDO says businesses have reacted positively to the political stability after the general election, and increased certainty has encouraged businesses to invest and focus on their long term prospects. This is most marked in property and financial services which had feared policy change.
However, Bank of Scotland notes that employment levels fell for the first time in nearly four years and companies reported ongoing spare capacity. Input costs increased at a slightly weaker rate and charges rose for the first time since last December.
Donald MacRae, Chief Economist at Bank of Scotland, said: “Activity grew in the services sector while manufacturing output showed a welcome return to growth after the contraction of the last three months. New orders rose in all sectors while the pace of decline in new export orders slowed. Although employment fell the Scottish economy continued the recovery from the slowdown in the first quarter of the year. Moderate growth is expected for the rest of 2015.”
BDO notes that although business optimism is down this month it is still significantly above the long-term trend.
“This shows that the UK is starting to pull ahead from other global heavyweights in the Eurozone and some emerging markets,” says the report.
Martin Gill, head of BDO in Scotland, said: “Political certainty has bolstered short-term business confidence. The result is a thriving economy, despite global economic unrest.
“However, as business success continues to exceed other markets, the strong pound will make it harder for our exporters – particularly manufacturers – to find customers. We can’t let confidence tip over into complacency; keeping us competitive should be a government priority.”