Best turnover figures in more than seven years

SCOTTISH firms enjoyed their best sales performance for more than seven years over the summer, with confidence levels remaining high for the rest of 2014 and into 2015, a Bank of Scotland survey revealed today.

Donald Macrae: Private sector could see vigorous growth

Both the manufacturing and services sectors are seeing strong demand, and the report’s findings show that the recovery in export activity seen in the previous two surveys has continued.

The bank’s latest Business Monitor report showed that, in the three months to the end of August, just under half of companies had enjoyed an increase in turnover, while 32 per cent experienced static turnover and 19 per cent saw a decrease.

The net balance of 30 per cent was higher than the previous quarter’s 28 per cent reading and means the figure has returned to levels last seen before the financial crisis struck.

Firms’ assessment of their immediate prospects in the next six months was on a rising trend throughout 2013 and reached highs in the first two quarters of this year. Although the latest survey shows that gain has been partially reversed, confidence is still slightly above the high levels of the second half of 2013.

Today’s report marks the seventh successive Business Monitor showing a positive net balance for turnover expectations – the most optimistic sequence of results since 2007.

Donald MacRae, chief economist at Bank of Scotland, said the expectation levels suggest the private sector of the Scottish economy will show “vigorous growth” in autumn 2014.

He added: “The surge in economic activity identified in summer 2013 has been maintained into summer and autumn this year. Expectations have fallen slightly but are at pre-recession levels, suggesting the recovery will continue throughout 2014 and into 2015. Further increases in investment by firms would enhance the recovery.”

The survey showed expectations for cost increases have fallen sharply since the last quarter. Concerns over credit availability also fell slightly for production companies but rose for service firms, while worries over cash flow increased slightly for both.