Scotland's economy: '˜remarkable' growth for factory sector

Manufacturers in Scotland have experienced a 'remarkable' quarter, with strong demand expected to continue, according to new data from the CBI.

The CBI hailed a 'remarkable' period of growth for Scotland's manufacturers. Picture: Andrew Milligan/PA Wire

The organisation said in its latest survey of industrial trends north of the Border, which received responses from 34 businesses, that the three months to July were boosted by record growth in domestic orders.

These reached an all-time high of a balance of +55 per cent, while export orders also expanded at a stronger pace, coming in at +23 per cent, as they benefited from the fall in sterling’s value.

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Additionally, in terms of an increase in total orders, there was a rounded balance of +50 per cent, the highest since October 1973, while output rose at the fastest pace in almost 30 years.

CBI Scotland director Hugh Aitken said: “It has been a remarkable quarter for Scottish manufacturers with orders and output growing at the fastest pace we’ve seen in decades, suggesting the sector may be beginning to regain its poise after a difficult 2016.

“Indeed, firms expect decent growth in activity to persist into the next quarter.”

The CBI, which in the UK represents 190,000 businesses that employ seven million people, said expectations for growth in the coming quarter (+26 per cent) are the strongest since October 2014. This was backed by the brightest outlook for export order growth in a decade, at +36 per cent.

In terms of optimism about the general business situation compared to three months ago, a balance of +30 per cent were more optimistic about the general business situation than three months ago.

Turning to staffing, a balance of +46 per cent of manufacturers said employee numbers were up, the highest on record, and a record proportion of firms, at about a third, cited labour shortages as likely to stifle capital expenditure plans for the year ahead.

Aitken addressed the issue, saying: “Firms are taking on new staff at a record rate and plan on further increasing headcount over the next three months, though it is clear that accessing skilled labour is a principal concern of manufacturers and is being flagged by a third of our panel as being likely to force them to hold back on investment.”

CBI figures for the UK as a whole found that manufacturing output grew at the quickest rate since January 1995 over the quarter, at a balance of 31 per cent, sparking the sector’s biggest hiring spree in three years.