Progress in Scotland’s economic fightback is set to continue in 2014 despite a slowing in the pace of recovery last month, according to new reports.
Data for December from the Bank of Scotland’s monthly purchasing managers index report found the weakest rise in business activity since May.
While still above the benchmark of 50 representing growth, the December output meaure of 54.5 was down on the 55.2 seen in November and significantly below the 59.2 figure seen across the UK as a whole.
The level of new work also slowed to a seven-month low of 55 according to the PMI, although the backlog of outstanding work for Scottish companies grew slightly during the month in contrast to the wider UK picture.
The report’s authors said anecdotal evidence suggested the piling up of orders in Scotland was a consequence of new work increasing ahead of output.
Net job creation north of the border eased back significantly during the month, while both input and output prices rose faster than the previous month. Rising transport costs and energy bills were identified by respondents as a key reason behind input price inflation.
BoS chief economist Donald MacRae said: “December’s PMI showed the private sector of the Scottish economy continuing to grow although at a reduced rate compared to summer.
“Both service and manufacturing sectors recorded a rise in new work and continued to increase employment in the month.
“New manufacturing export orders showed a disappointing fall perhaps due to a strong pound. The overall PMI at 54.5 remains high suggesting the recovery in the Scottish economy continued at the end of last year and looks set to persist throughout 2014.”
In a separate report also published today (MON), accountants BDO said confidence was growing in the Scottish business community and an increasing number of firms were now expecting to recruit new workers in 2014.
The BDO Optimism Index measure increased to 103.4 in December from 103.1 a month earlier, while the output index was 0.7 higher at 102.5 over the same period. Both measures were signifcantly ahead of the respective 90.3 and 93.1 scores of a year previous.
“We’re encouraged to see that businesses are growing in confidence and have sharply increased their hiring intentions over the past month, which should help to keep the unemployment rate on a downward trajectory,” Martin Gill, partner and head of BDO LLP in Scotland said.
“The issue of unemployment is particularly important given the Bank of England Governor Mark Carney’s decision not to allow an interest rate rise until the unemployment rate is at or below 7%.
“The flip side of all this is that labourproductivity is still far below its pre-crisis peak. As a result, the issue of underemployment remains, with some 1.5 million workers seeking full-time jobs being forced to work part-time over August-October 2013.”