‘Positive approach’ for Scotland’s engineering firms

Engineers' export orders have been boosted by the weaker pound. Picture: John Devlin
Engineers' export orders have been boosted by the weaker pound. Picture: John Devlin
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Scotland’s engineering businesses have reported a further quarter of improving orders, output and staffing levels.

Firms are also looking forward with a “positive approach” to the next three months, according to the latest snapshot from industry body Scottish Engineering.

Its report showed that total order intake across all sizes and sectors was better than both of the previous two quarters, which followed seven quarters when the returns were negative. This has resulted in staffing increases, the trade organisation noted.

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Export orders, meanwhile, were higher in the first two quarters of 2017 than they were in the preceding 13 quarters, aided by the weak pound.

Optimism across the industry was similar to the first quarter of 2017 which marked a considerable increase compared to the previous two years.

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Bryan Buchan, chief executive of Scottish Engineering, said: “Particularly strong growth has come through in staffing levels and despite this, levels of overtime working continue to be relatively high.

“Not surprisingly, against this background optimism remains high. Initially, when the exchange rate against sterling fell, the Scottish engineering sector took some time to catch up with the rest of the UK in terms of export orders.

“That may have been down to the fact that most of our orders go to the rest of the UK and it took us somewhat longer to hit the export trail.”

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Buchan added: “For the second consecutive year our Scottish Engineering/Incorporation of Hammermen of Glasgow Award presented to a young graduate was won by a young lady. This year it was won by Meryl Devlin of Aggreko in Dumbarton.”

Output from Britain’s manufacturing sector inched back from a three-year high last month, but still managed to beat expectations thanks to robust growth in new orders.

The latest Markit/Cips manufacturing purchasing managers’ index revealed a reading of 56.7 for May, down from 57.3 in April but above economists’ expectations of 56.5. Any reading above 50 denotes growth.

Manufacturing production and new orders grew above the average rate thanks to strong demand in the UK and a “solid increase” in exports.

Firms were also feeling positive about the year ahead, with business optimism climbing to a 20-month high and jobs growth expanding at its fastest rate since June 2014.

Andy Hall, head of corporate banking, central Scotland at Barclays, said: “Fears of a 2017 slowdown don’t yet seem to be feeding through to the manufacturing sector as it continues to report growing levels of investment and employment, as well as healthy order books.”

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