Private sector 'moves up a gear'
Firms shrug off uncertainty as output hits three year high
Factories are hiring staff to handle new orders
Output from Scottish businesses is rising at its fastest pace in nearly three years, according to new data, as companies shrug off political uncertainty.
Manufacturing and services performed positively in July, the strongest growth in the private sector in 33 months.
Output also extended the current trend of expansion to eight months, the longest sequence since 2014.
The Bank of Scotland purchasing managers’ index also showed that job creation is at a 31-month high, signalling an expansion in the workforce for the second month running.
Comments gathered in the survey suggested that firms responded to higher output requirements by hiring staff.
Fraser Sime, regional director, Bank of Scotland commercial banking said: “July’s survey results signalled the Scottish private sector moving up a gear, as the PMI posted its strongest result in 33 months.
“This good news was fuelled by the service sector returning to meaningful growth, alongside a faster increase in manufacturing output.
“Job creation remained positive for the second month running, with July marking the fastest expansion in employment in over two-and-a-half years. Employment growth was consistent across the manufacturing and service sectors.
“Input price inflation remained strong in the latest survey, with many firms citing wage inflation and the exchange rate. That said, the positive effects of a subdued currency could be seen in the growth of manufacturing exports in July.”
Economy Secretary Keith Brown said the figures showed “a strong and welcome start to the second half of the year.”
He added: “Business confidence continues to grow as future output expectations increase.
“These results are a further vote of confidence in the Scottish economy, coming on the back of GDP figures that show growth four times that of the UK over the first three months of the year, with unemployment also at a record low of 3.8%.
“While this is encouraging, Brexit uncertainty continues to cast a shadow over the future economic outlook, threatening jobs, investment and living standards. The Scottish Government will continue to use all of the powers at our disposal to grow the Scottish economy.”
> Retailers continue to suffer from a squeeze on the high street. Footfall in Scotland fell by -0.4% in July, the third decline since January, against a previous three-month steady growth. Footfall has only grown in five of the last twelve months.
High Street footfall fell by 0.6% and in shopping centres by 2.2%, while it rose 2.1% at retail parks.
One in ten shop units remain vacant. The town centre vacancy rate for Scotland rose marginally to 9.3% in July against 9.2% in April 2017. This remains lower than the average vacancy rate for the UK, which rose to 9.6% in July from 9.3% in April.
Ewan MacDonald-Russell, Scottish Retail Consortium head of policy & external Aafairs, said: “This is a rather cheerless set of figures, heralding a second successive quarterly increase in the shop vacancy rate in our town centres coupled with shopper footfall sagging last month.
“Indeed, shopper footfall fell at a more pronounced rate of decline than witnessed over the past three-month period as a whole.”
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