Scottish businesses saw “robust” increases in their workloads last month, according to the latest survey of purchasing managers.
The monthly Bank of Scotland PMI study said the much-improved figures for May demonstrated a “marked improvement” in the health of the private sector economy north of the border, and prompted more claims that the Scottish economy is on the road to recovery.
The bank chief economist Donald MacRae said the results showed that the improving picture was “becoming more strongly embedded with every passing month”.
The research report also revealed that input price inflation fell, as both output and new work inflows rose. Last month also saw the strongest rise in employment for more than a year, while the index assessment of 54.4 showed the pace of business growth continued to increase.
Professor MacRae said manufacturing and the services sector were strong, but export orders remained a weakness due to continuing turmoil in Europe.
“At 54.4, May’s PMI is not only the highest for 25 months but has now been above the no-growth level of 50.0 for eight months in a row,” he said.
“Output grew in manufacturing, and activity was strongly up in the large services sector, with an encouraging rise in new orders across the economy evident for the sixth month in succession.”
The survey said the latest monthly increase in levels of new business was the sixth on the bounce, with domestic markets more than compensating for a slight fall in demand in manufacturing for export.
Companies also told research firm Markit that a reduction in fuel prices had dampened the pressure of inflation, though output prices continued to rise.
The pace of expansion in the month was broadly in line with the wider UK, but the increase in employment in Scotland was stronger than the British average and second only to the pace of growth in the West Midlands.
Finance Secretary John Swinney said: “These positive results follow the announcement earlier this week that Scotland has attracted its highest level of foreign investment for 15 years, with 30% of the investment in Scotland in manufacturing, demonstrating the strengths of the Scottish economy.”