Scottish firms blame severe weather for reversal

COMPANIES are blaming “severe bad weather” for a shock reversal in Scotland’s economic fortunes last month as a widely-followed index of private sector growth dropped into negative territory for the first time in over two years.

Donald MacRae, chief economist at the Bank of Scotland. Picture: Contributed
Donald MacRae, chief economist at the Bank of Scotland. Picture: Contributed

The latest purchasing managers’ index (PMI) from Bank of Scotland, published today, dropped below 50 – indicating a deterioration or decline – for the first time since September 2012.

It fell from 52.8 in December to 47.7 in January, with both the manufacturing and services sectors reporting the adverse weather conditions had disrupted activity.

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Donald MacRae, chief economist at the Bank of Scotland, said: “The first month of 2015 has given the recovery in the Scottish economy a sharp, weather-related jolt reminiscent of the bad weather effect of four years ago.”

But he said levels of employment and new business were maintained, while new export orders showed “an encouraging increase”.

Business activity in the services sector fell for the first time in more than four years, the report revealed, stating there was anecdotal evidence to suggest “bad weather during the month had a negative impact”.

The worst-performing sector was said to be travel, tourism and leisure, which recorded a sharp decrease in the level of activity when compared to December. Job creation among service sector firms “slowed abruptly” last month the report said, while the level of new business also “increased at a much slower rate”.

Employment at Scottish firms held steady during the opening month of the year, but that compared with robust growth in staffing levels throughout 2014. A slight net gain in payroll numbers in services negated lower employment at factories.