Commentary continues to warn of dark times ahead for employment, business investment and the economy. News items against this bleak trajectory are dismissed as dying embers from a previous era. Our productivity performance remains miserable. On growth, we are trailing other economies.
As for “good news”? The doubters scoff. Ha! When all else fails, clutch at straws. In the past week, several such straws have been borne along in the flow of black detritus and muddy gloom. They may not be the rescue life raft of our dreams. But they look more than straws to me.
The week began with a startling, against-the-odds report from the Bank of Scotland. Indeed, many will have found it so surprising they will have read it twice because they couldn’t believe it the first time. The bank’s latest Purchasing Managers Index covering private sector output growth surged to a 33-month high in July, its highest since October 2014. This, says the bank, reflected stronger expansions in both manufacturing and services. Increased output was driven by a steady expansion in new business. The manufacturing sector registered strong growth in new orders, while new business in the service sector rose at a comparatively moderate rate.
Job creation was at a 31-month high in the latest survey, signalling an expansion in the Scottish private sector workforce for the second month running. Comments gathered in the survey suggested that firms responded to higher output requirements by hiring additional staff.
Sentiment towards the future remained positive overall, and matched June’s confidence reading. Fraser Sime, regional director, Bank of Scotland Commercial Banking, said: “This good news was fuelled by the service sector returning to meaningful growth, alongside a faster increase in manufacturing output.”
A mere survey, you may think. Best, surely, to stick to official data for the hard facts. Well, two days later, along came official data from the Scottish Government. This showed Scotland’s employment rate hit a record high in the three months to June. Numbers in work reached 2,650,000, or 75.2 per cent, a rise of 1.1 percentage points over the quarter. Meanwhile, Scottish unemployment fell by 12,000 to stand at 107,000. The jobless rate fell by 0.5 per cent from the previous quarter to 3.9 per cent and now stands below the UK figure of 4.4 per cent. Youth unemployment is at its lowest ever recorded.
The Holyrood administration has hardly been the happy ray of sunshine of late. No opportunity is lost for hand-wringing over Brexit. What a dark spectre has been cast, blighting business confidence and investment.
But even Economy Secretary Keith Brown raised a cheer: “These latest figures,” he purred, “show continued resilience in our labour market… This is a further vote of confidence in our economy, coming after GDP figures showing Scotland’s growth rate was four times faster than that of the UK over the last quarter, and recent reports of accelerating growth across the private sector.”
Meanwhile, the latest figures show that the UK’s trade deficit has tended to fall: total trade exports in June at £28.3 billion are up 15 per cent on June last year, outstripping the four per cent rise in imports.
And on Friday came news that spoke to that rarest of things – a Brexit beneficiary. Official figures show the number of visitors to the UK rose to 3.5 million in June, up seven per cent from June last year. Visitors from continental Europe rose by two per cent to 2.241 million while those from the US shot up 34 per cent to 650,000.
The weaker value of sterling since the Brexit referendum vote means that the UK is now a much cheaper destination. Sterling has tumbled 16 per cent against the euro since the June 2016 referendum, and has fallen 23 per cent against the US dollar, encouraging visitors to spend more. VisitBritain predicts tourists’ spending will surge by 14 per cent this year. Stores report sales of pricey jewellery and high fashion items have been rising the most.
Even the BBC joined in the cheer: “Tourism has been one of the most successful parts of the UK economy recently,” it reported, “thanks in part to Brexit.”
Separately, the latest data from Forward Keys, which monitors flight bookings, suggests international arrivals to the UK will be nine per cent higher for August to October this year compared with the same period of 2016.
US hotel chain Hilton has 138 hotels in the UK, and is planning to open 30 more, partly because of the tourism boost spurred by the fall in sterling. It says it has seen double-digit growth in the UK over the past year.
All this may seem of little consequence for Scotland and even less for audiences at this year’s Edinburgh Festival. But figures show that Edinburgh and Glasgow airports enjoyed their busiest ever start to the summer, with more than 1.1 million passing through Edinburgh Airport in April, up 13 per cent on the same period last year. The biggest increase was in international passengers at more than 705,000, a 20 per cent leap on the same period a year earlier.
As for Edinburgh Festival numbers, more than 340,000 people passed through the city’s main train station in the first weekend. Waverley station usually sees an average of 70,000 passengers a day. This suggests that between Friday and Sunday an extra 43,000 passengers passed through, on average, each day.
But this boom in visitor numbers and spending is not without problems. There are growing questions about the capital’s capacity to cope with numbers of this magnitude and the strain this is placing not only on popular cultural and heritage sites but also the city’s infrastructure.
Finally, retail sales in Scotland showed a bounce back last month, with total sales up by 1.2 per cent adjusted for deflation on the previous year. This, says Scottish Retail Consortium director David Lonsdale, marks “a creditable performance driven by grocery sales and a better showing from non-food categories.”
Now caveats abound with all of this – a continuing squeeze on earnings, poor productivity and low investment. But amid all the gloom we should note, too, the evidence of resilience.