New Service Sector Business Brings Growth

Employment in the private sector has risen for the 4th month in a row.

Jobs and wages in the services and manufacturing industry have been buoyed thanks to an increase in new business. It is an indication that the Scottish economy has recovered from an initial slump in January, which was caused by bad weather and a fall in oil prices.The seasonally adjusted headline Bank of Scotland PMI – a single-figure measure of the month-on-month change in combined manufacturing and services output – strengthened to 51.9 in May, up from 50.7 in April. The latest reading was the best recorded of the year so far.
 
The service sector was the primary driver of growth, as a solid increase in new business drove activity up for the second month in a row. There were reports of success in winning new business from both domestic and international clients. Conversely, output in the manufacturing sector was reported to have fallen for a second month running due to a lack of incoming new orders. General election uncertainty and difficulties in sourcing new export business were reported to have weighed on new work. 

Donald MacRae, Chief Economist at Bank of Scotland, said:

"May’s PMI at 51.9 was the highest for five months driven by robust growth in service sector activity. Although manufacturing output shrank the rate of decline slowed.  Employment and new business increased across all sectors but new export orders for manufactured goods declined but a reduced rate compared to last month.  The Scottish economy is regaining some growth momentum lost in January this year."