Scotland's industries show signs of recovery

Scotland's manufacturing sector remains in recovery mode with export confidence hitting a three-year high despite widespread fears of a drop-off in global demand as government spending cuts begin to bite.

Releasing its latest industrial trends report, CBI Scotland suggested growth in total orders had exceeded expectations in the past three months.

The outlook was equally robust, with firms expecting their export orders to grow at the fastest rate since July 2007. Confidence surrounding overseas sales prospects was at a three-year peak.

Just last week, business leaders were warning that Scotland's recovering export performance may be "difficult to sustain", after government figures showed an acceleration of growth during the spring.

Yesterday's Scottish CBI report coincided with a UK-wide industrial trends survey, which suggested that the picture may not be as rosy south of the Border.

That report revealed a sharp fall in export trade over the summer as well as a slide in factory orders to a six-month low. Yet, firms pointed to a bounce-back, with expectations for output over the next three months at the best level since April 2007.

Both reports were based on relatively small samples, with 420 respondents UK-wide and just 38 north of the Border. That may have skewed the outcome as similar industrial snapshots and official sector data are based on much larger samples.

Howard Archer, chief UK economist at IHS Global Insight, said: "The concern is that manufacturers will see softer growth as stock rebuilding winds down, tighter fiscal policy increasingly weighs down on domestic demand."