The Bank of Scotland’s Purchasing Managers’ Index for June shows that growth in the private sector accelerated sharply at the end of the last quarter; in fact, Scottish firms reported their fastest rise in business activity since May 2007, with a marked rise in both factory output and service sector activity.. There was a marked increase in new work throughout June, allowing firms to take on more staff. The Bank believes this is further evidence of a strengthening economy north of the border.
Today’s report adds to the growing sense of confidence. In the past few days, Ernst & Young’s Scottish Item Club recently revised its prediction for growth in the Scottish economy upwards for this year, albeit marginally. And last week, Scottish motor traders said that 2013 could be the best year for new car sales since 2007.
Professor Donald Macrae
Bank of Scotland
The result for June was the third straight month the Index had risen. It now stands at 57, up from 54.4 in May and 53.1 in April, clearly indicating an acceleration. Any reading above 50 indicates growth. And for once, it suggests a faster expansion in output in Scotland than elsewhere across the UK.
However, it wasn’t all good news. Growth was mainly driven by resurgent domestic demand. Manufacturers reported they’d suffered a further loss of new business overseas. The reasons given for this included an unfavourable exchange rate and a lack of demand in key export markets. Nonetheless, the increased workload along with new work in the pipeline encouraged businesses to hire additional people in June; that makes seven months in a row when firms have reported net job creation in Scotland.
The Bank of Scotland’s chief economist, Professor Donald MacRae, said that “both the services and manufacturing sectors recorded rising activity and output, accompanied by growth in employment. This growth spurt is domestic-based, with new export orders outwith the UK falling for the second successive month. Nevertheless, these results provide more welcome evidence of the growing strength of the recovery in the Scottish economy.”