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Output expected to improve

Scottish factories ‘to show upturn’ from pound and exports

Wireline industryScottish factories are expected to show an upturn in activity as the benefits of the low pound begin to work their way north of the border.

Daily Business understands the next survey due out from Scottish Engineering will show a more positive outlook in line with the brighter picture in England.

A new survey today shows that Britain’s construction industry unexpectedly returned to growth in September.

The Markit/CIPS UK Construction Purchasing Managers’ Index rose to 52.3 from 49.2 in August, beating all forecasts.

British factories also had their strongest month in more than two years in September, reducing the need for further stimulus from the Bank of England and the Treasury.

The Markit/CIPS Manufacturing Purchasing Managers’ Index showed a surge in export orders, helped by the fall in the value of the pound after June’s referendum vote to leave the European Union.

Scotland’s factories have performed less well, with eight quarters of negative orders, largely because they are more directly impacted by the slump in the oil industry.

It is also because Scotland has lower exports to the continent and therefore did not benefit immediately from sterling’s decline against the euro.

However, Scottish firms are expected to receive a knock-on benefit through the supply chain.

The price of oil has also ticked up following the recent Opec talks and has given hope of a gradual and sustained recovery.

September figures for the UK’s manufacturing sector, showed the index reaching its highest level since June 2014, rising to 55.4 from 53.4 in August as it continued to rebound from a three-year low in July.

The data points to third-quarter growth in manufacturing and analysts now doubt that there will be any further monetary action in November as expected.

Consumer goods producers enjoyed the best figures, while export orders rose at the fastest rate since January 2014.

The EEF, which represents manufacturers south of the border, said strong demand across Europe would continue to benefit British exporters.



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