Scotland's engineering sector sees performance uplift but confidence dips

There is a growing feeling within Scotland’s engineering sector that manufacturers are succeeding despite the wider business environment rather than because of it.

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The latest Scottish Engineering survey points to improving demand across much of the industrial economy, with order intake rising to +17 per cent and output volume climbing to +20 per cent during the second quarter of 2026.

Export demand also returned to positive territory at +9 per cent, while staffing levels and overtime both increased, suggesting many firms are becoming busier again after a prolonged soft patch.Businesses also continue to invest heavily in workforce capability despite ongoing skills shortages.

Training investment rose to +21 per cent, underlining a long-term commitment to rebuilding industrial capacity across the sector.Yet beneath the stronger operational performance sits a much more cautious mood.

Overall business optimism slipped to -7 per cent, with manufacturers warning that rising energy costs, global instability and proposed UK steel trade measures are creating growing uncertainty around competitiveness and future growth.

Paul Sheerin, chief executive of Scottish Engineering, said: “While this quarter’s results show another welcome step up in demand, wider concerns for input costs have eroded some of the recently regained confidence. Stronger order intake, output and export activity reflect the resilience of our industry, but falling optimism highlights growing concern around energy costs, global instability and the impact of proposed steel trade measures.”