Scots economic recovery slows but employment rises

Growth was affected by a modest rise in the amount of incoming new work at companies, the bank said. Picture: John Devlin

Growth was affected by a modest rise in the amount of incoming new work at companies, the bank said. Picture: John Devlin

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THE PACE of economic recovery slowed in November but employment rose, according to a report.

A monthly survey by the Bank of Scotland found business activity in Scotland’s private sector increased at one of the slowest rates over the past two years.

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Growth was affected by a modest rise in the amount of incoming new work at companies, the bank said.

Its Purchasing Managers’ Index (PMI) collects information from around 600 companies operating in the manufacturing and service sectors.

Manufacturing was found to be the weakest area, with new orders falling for a third month in a row due in part to a loss of new export business.

The amount of business activity at services firms was also weaker than in the previous month.

Despite this, employment rose at a “solid and accelerated” rate and cost pressures facing businesses eased to a new low since the financial crisis.

Donald MacRae, the bank’s chief economist, said: “November’s PMI fell to 52.8 indicating the Scottish economy continued to grow but a reduced rate compared to the summer months.

“Manufacturing sector output grew despite a fall in new order inflows while new export orders fell for the fifth successive month, illustrating the challenge of increasing exports to a stagnating eurozone economy.

“All sectors employed more people in a welcome sign of continuing high levels of business confidence. The recovery continues but the pace has eased slightly.”

Scotland Office Minister David Mundell said: “As today’s Bank of Scotland’s PMI report shows with continuing private sector growth and rising levels of job creation, there are challenges to face for our economy with difficulties in the Eurozone and the wider global economy.

“With our economy growing and more people moving into employment, Scotland is doing well as part of the UK. Last week’s Autumn Statement highlighted this Government has taken the difficult and necessary decisions to deal with the deficit, rebuild and rebalance our economy which has helped position the UK as the fastest growing of any major advanced economy in the world.”

Another economic report, the Ernst & Young Scottish ITEM club forecast, has also been revised up on the performance of the Scottish economy.

The report improved its forecasts for employment into next year.

Scots economy sees fastest GDP growth in 7 years

Deputy First Minister John Swinney said: “Economic recovery in Scotland is now being sustained with the latest GDP figures showing Scotland’s economy growing continuously for two years. With the 26th month of expansion in the PMI, and the most recent forecasts for Scottish GDP growth having been revised up, the economic outlook remains positive.

“The latest figures on the job market from July to September 2014 also revealed that Scotland has the highest employment and economic activity rates and lowest unemployment rate of the four nations of the UK.

“Supporting economic growth, by effective work with business and by tackling inequalities, is integral to this Government’s approach to creating a more prosperous and fair society.

“The focus of our economic strategy on innovation and internationalisation is essential to address the headwinds to the recovery, particularly weaknesses in key export markets as well as political uncertainty at the UK level.

“We will continue to do all we can to ensure the positive trends continue, but with further job creating powers, we could do even more to help families throughout Scotland.”

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