Sunnier June as private sector shrugs off woes and creates jobs

Scotland’s private sector bounced off its recent low point and started creating jobs again in June, boosting hopes that the economy north of the Border can avoid the recession plaguing the UK as a whole.

The latest purchasing managers index (PMI) from Bank of Scotland, released today, shows that output in the Scottish private sector expanded at a faster rate in June after dropping to a 17-month low in May.

The bank’s chief economist, Donald MacRae, said: “The June PMI showed a welcome pick-up in the Scottish economy with both manufacturing and services recording growth.

“Employment rose across all sectors while cost pressures continued to ease.”

But MacRae warned that there was only a marginal rise in new orders, with new export work actually falling, illustrating the challenge of maintaining growth in the face of a widespread slowdown in world economies.

The PMI – a seasonally adjusted index monitoring activity across Scotland’s manufacturing and service industries – stood at 52.5 in June, up from May’s 50.8 and ahead of that recorded at the UK level.

Both goods production and services activity north of the Border increased over the month, the latter at a sharper rate.

Scottish private sector employment increased in June for the seventh time in the past eight months, following a lull in job creation during May. Manufacturers registered a sharper rise in employment levels than their services counterparts, the report said.

The rate of net staff hiring across the UK as a whole meanwhile slowed for the second month in succession, it added.

Jobs data due out today from the Association of Professional Staffing Companies also reflects an improving picture in the employment market.

Online recruitment activity showed a 25 per cent year-on-year rise in Scotland. Banking and insurance was only sector where to experience a contraction, with recruitment down 26 per cent compared to June 2011.

Meanwhile, the majority of English regions suffered from a slowdown in private sector activity last month, as the bad weather and additional bank holiday hindered business.

PMI data for England came in at 51.3 in June, down on 52.3 in May and the slowest rate of expansion since November 2011.

A widening gap between the regions was revealed by the survey, with business activity growth strongest in Yorkshire & Humber and the West Midlands, while the North West stagnated and the East and the North East suffered declines in private sector output.

Only five of the nine English regions posted an increase in incoming new orders.

Weak gains in new work also contributed to cautious hiring trends in England during June. The latest increase in workforce numbers was only marginal and the slowest in 2012 to date.

As in Scotland, where input price inflation eased to its slowest pace in 33 months, cost pressures also eased south of the Border, helped by falling fuel and raw material prices.