Two reports show clear evidence of light at the end of the Scottish economic tunnel. The first, from the Bank of Scotland, is its regular Purchasing Managers Index, or PMI. This provides a strong signal about recovery, with many companies were winning new orders last month and managers taking on extra staff. For the first time in a long while, Scottish exports returned to growth. There was even more positive news from the manufacturing sector which saw the second strongest month in the 15 years since the survey began. Services too saw positive growth with companies winning new work at the fastest pace since 1998.
Professor Donald Macrae
Bank of Scotland
According to the Bank of Scotland’s chief economist, Professor Donald MacRae, “Business confidence is clearly on the increase. The recovery will become even more embedded if firms build on this ten-month run of positive PMIs by increasing investment.”
The second report comes from the Scottish government’s chief economist, Dr Gary Gillespie — his quarterly update on the state of the economy. In this, he says that the recovery was gaining momentum and traction, helped by positive news across the UK economy and in the US. His analysis of productivity suggests that this had returned to the level before the downturn began. However, he pointed out that growth remained substantially below the levels before 2008.
In his report, Dr Gillespie argued that if the rise in Scotland’s productivity was permanent, it could be the basis for stronger growth once demand returned to previous levels. “The recent output growth and underlying nature of the recession in Scotland,” he wrote, “suggest the potential for Scotland’s recovery to gain traction throughout 2013 and the economy as a whole to return to pre-recession levels of output in 2014. This growth will be required to see a sustained recovery in the labour market, particularly employment, and to support improvement in real wages.”