Scotland’s private-sector economy strengthened its bounce-back last month, with the early weeks of summer showing the fastest rise in business activity since before 2008’s banking crash.
In the latest sunny news for the economy, purchasing managers’ data collated by the Bank of Scotland revealed a spike in workloads for firms and another increase in the rate of job creation.
The number of new posts rose more quickly than at any time since last spring, with the trend at a 14-year high, as the survey also highlighted a record increase in new work.
Index data showed the boost in fortunes was most pronounced last month, with the standardised rating climbing by 2.6 points to a five-year high of 57.0.
June also saw significant growth in new work, driven by what the survey called “resurgent demand in the domestic market”.
But there was bad news for exporters as manufacturers continued to lose business from overseas.
Growth in order books led to firms taking on more staff last month, and the sharpest rise in work backlogs in over six years.
Bank chief economist Donald MacRae said the study had shown a “sharp acceleration” in growth.
“Both the services and manufacturing sectors recorded rising activity and output, accompanied by growth in employment,” he said.
“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.”
Companies also had to contend with a slight increase in input price inflation, while the cost of food, fuel, staff and utilities also continues to rise, and at a faster level than for the UK as a whole.
Pressure on margins continued to ramp up as output prices rose at a slower pace.
Fergus Ewing, the Energy, Enterprise and Tourism Minister, said: “These welcome figures show continued strengthening in private-sector output in Scotland, which has expanded for the ninth consecutive month and has reached the highest level since 2007.
“These positive figures reinforce last month’s encouraging labour market results, which showed Scotland’s employment rate is now higher than in any of the four nations of the UK, whilst the unemployment rate in Scotland is lower than in any of the four nations of the UK,” he added.
The news came as business services firm BDO said its business optimism index had moved to a 13-month high, with the services sector particularly strong.
The group’s Business Trends report also revealed that more firms now expect to increase their turnover during the coming month, with manufacturers showing a “significant” increase.
However, BDO also warned that both measures remained “muted”, thanks to volatility in the eurozone, belt tightening by consumers, and the prospect of a slowing of quantitative easing in the United States.
“While it’s encouraging to see confidence continuing to improve, we should be mindful of the zig-zag trend that has characterised business confidence since 2008,” said head partner for Scotland Martin Gill.