EU vote and living wage halting growth
Job prospects plunge to lowest since financial crash
Two surveys out today suggest the Scottish economy remains poised on a knife-edge with output patchy and job prospects slowing sharply.
A Bank of Scotland survey shows output has stabilised but few encouraging signs for job creation.
The findings are supported by another survey from BDO which shows hiring intentions at their lowest since the end of the financial crisis.
It latest Business Trends report increasingly shunning new hires as the National Living Wage makes employment more expensive. Some firms may also be holding off until uncertainty about future membership of the EU is resolved.
Martin Gill, Scottish head of BDO, said: “While there have been concerns about productivity across the UK compared to our international competitors the situation is worse in Scotland.
“Our economy has grown in cash terms by just 4% since the 2008 recession compared with an increase of nearly 23% across the UK as a whole.
“As well as some long term issues with the Scottish economy there are also signs that the downturn in oil and gas is having a direct impact on GDP. In the last quarter of 2015 Scottish GDP rose by just 0.2% compared to a 1% quarterly rise for the same period in the previous year.
“Our figures this month on hiring intentions suggest that Scottish businesses are concerned about the direction the economy is travelling in and are starting to look harder at whether recruiting new staff is always the right answer.”
Data from the Bank of Scotland shows output among private sector companies remained unchanged in April after two months of contraction.
Services showed improved while manufacturers reported an eighth successive monthly fall in orders.
Job losses also showed little sign of slowing and continued for the fifth successive month, with the latest decline the largest since November 2010.
This was broad-based across goods producers and service sector companies, with several firms partly linking the fall to the downturn in the oil and gas industry.
For the first time in nine months, firms raised their output charges. According to anecdotal evidence, the rise was linked to efforts to match competitors’ prices. An increase in average tariffs in the service sector was partly offset by discounting by Scotland’s manufacturers.
Meanwhile, input price inflation was the sharpest for 26 months. Scotland’s private sector firms have reported a rise in average cost burdens in the past three surveys, with panellists associating the latest increase with higher average salaries.
Alasdair Gardner, Bank of Scotland regional managing director Scotland – commercial banking, said, “Stabilising business conditions were the theme of April’s survey data, which is encouraging news for Scotland’s private sector after an intensifying downturn over the previous few months.
“However, firms still reported declines in their backlogs of work levels and employee numbers, suggesting that the economy could be poised to return into contraction territory in the near future.”