Scottish engineering companies are reporting that orders, output volumes and prices have dropped over the last three months.
According to the latest quarterly review of the industry, published by Scottish Engineering, order intake levels have dipped into negative territory after five consecutive months of positive trading.
The report stated that figures for output volumes have dropped by 18 points but still remain positive.
Bryan Buchan, the body’s chief executive, said the thinking within the organisation is that global forces are having a detrimental effect on the industry in Scotland, with exports hit particularly badly.
“The recovery in the US which I believe is largely driven by domestic trade is being aided by the effect on energy costs of fracking,” he said.
“This is offset by the remaining fragility around the eurozone with individual countries still in a perilous economic situation, worsened by relatively high wage inflation in France and Italy in particular over recent years.
“The whole adverse mix is exacerbated by the effect of sanctions on Russia, compounding their economic decline and a slowdown in Chinese growth caused by an apparently untenable debt to GDP ratio.”
Scottish Engineering reckon there is also a possibility that the drop in fortunes could be blamed on a seasonal dip in activity throughout the manufacturing sector.
While the overall orders for the third quarter are negative, the forecast for the next three months in overall orders is much more positive.
This is also reflected in output volumes which for the last three months have been very low while the outlook for the next quarter is more upbeat.
Mr Buchan said: “This quarter has seen a very positive response from our members who, in common with the rest of the country, are undoubtedly suffering from referendum fatigue and are welcoming the prospect of moving forward in the last quarter of the year.
“We are however in a relatively strong position in terms of our international competitiveness, thanks to improving efficiency and cost containment.”