Scottish economy

Sentiment positive as confidence and activity rise

Manufacturing activity should increase

A rise in business activity and confidence among Scottish firms has emerged in two surveys published today.

The Royal Bank of Scotland purchasing managers index for February showed an increase in headline business activity for the first time in seven months, the first rise in workforce numbers in three months and continuing diminishing cost pressures.

Sentiment was firmly positive and improved further from December’s recent low across Scotland. Expectations were largely pinned on new product launches, increased marketing and projected growth in customers and sales. 

That said, optimism across Scotland remained muted when compared to the UK as a whole.

The latest Accenture / S&P Global Business Outlook survey showed Scottish business confidence rebounded in February to its highest level in more than 12 months and from a record low in October just after the markets crisis sparked by the mini-budget.. 

At +35%, the net balance of manufacturing and service sector firms expecting activity to increase over the next 12 months was the strongest recorded in over a year and marked a significant uptick from the +14% registered in October 2022.

Scottish companies were more confident than almost all of their European peers, with levels of optimism in the eurozone at +23%, but remained lower than the UK average (+43%).

The boost in Scottish business confidence was reflected in a more positive profit expectation. Fewer businesses expected both supply costs and output prices to rise, but these remain a significant concern. 

Stuart Chalmers, joint managing director for Accenture in Scotland, said: “It is encouraging that Scottish businesses are beginning to feel more confident after what has been a hugely challenging time. 

“The research shows that rising wholesale costs and the knock-on effect of the price of goods and services remain significant concerns, but this optimism shows the resilience of Scottish businesses. 

“While firms are understandably still cautious, it is also important to capitalise on this increased confidence and look to both the medium and long term with the skills of their people and their business investments.

“Empowering colleagues with new technology and upskilling existing workers will drive innovation and create the foundations for future growth.”

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