Scotland’s private sector enjoyed a “bright start” to the second quarter, with faster increases in business activity and new work, a new study has shown.
The Bank of Scotland’s monthly Purchasing Managers’ Index showed the business climate picked up in April, with the index figure rising to a 12-month high and signalling what the bank called a “solid increase” in activity north of the border.
It said the companies it surveyed had responded by creating more jobs, with reported employment increased at its fastest rate for nine months.
At the same time, pressure from input price inflation mellowed though sufficient cost pressure remained to encourage a further rise in output prices.
The bank’s chief economist, Donald MacRae, said the results pointed to the beginnings of a “robust recovery”. But he warned that flattening export orders showed Scotland was relying on its UK markets for growth.
“April’s PMI climbed to a 12-month high, signalling growth in the private sector of the Scottish economy at the start of the second quarter of the year,” Professor MacRae said.
“Both business activity and employment grew in the manufacturing and services sectors, while the volume of new business rose for the fifth month in a row,” he added.
“However, demand growth was largely UK-based, with the level of new export orders showing a flat trend for the last five months. These results suggest the Scottish economy is now beginning a more robust recovery.”
The survey showed that the “broad- based” signs of recovery were spread across all sectors.
Factory output returned to growth with manufacturers taking on staff, while service firms saw a further increase in both work and workforce. Scotland outperformed the UK as a whole.
Only Northern Ireland saw a steeper rise in costs, however, with the bank saying firms had highlighted energy, food and imported items as more expensive than the previous month.
Finance Secretary John Swinney said: “These positive figures come after last month’s GDP results that show Scotland’s economy grew 0.5% from October to December, compared to the UK where the economy contracted by 0.3% over the same period and follow on from recent labour market statistics showing that Scotland had higher employment and lower unemployment compared to the rest of the UK.
* The latest UK-wide Business Trend report from professional services firm BDO revealed that confidence had improved in the month. It found service sector confidence moved ahead “substantially” in April, but warned that sentiment remained subdued in manufacturing.