Sharp Increase in Scottish Output

Scottish private sector companies have reported an increase in activity but employment levels are down for the first time in four years.

The latest Bank of Scotland report shows Scottish private sector companies reported further growth in output and new orders at the start of the third quarter.

Activity has increased at its strongest rate during 2015 so far, while the pace of new order growth was little-changed since June.

However, employment levels fell for the first time in nearly four years and companies reported ongoing spare capacity.

Meanwhile, input costs increased at a slightly weaker rate and charges rose for the first time since last December.

Sector data showed that manufacturers reported a stronger increase in activity than service providers whilst output growth in the goods-producing sector was the strongest in nearly a year.

Scottish private sector firms reported the first decline in staffing levels since October 2011 during July, largely a result of job shedding in the service sector. Some panellists linked job cuts to internal restructuring efforts. The rate at which workforce numbers were reduced was modest. Ongoing spare capacity was signalled in the Scottish private sector in July.

Donald MacRae, Chief Economist at Bank of Scotland, said: “July's PMI at 52.2 was the highest so far this year.  Activity grew in the services sector while manufacturing output showed a welcome return to growth after the contraction of the last three months. New orders rose in all sectors while the pace of decline in new export orders slowed. Although employment fell the Scottish economy continued the recovery from the slowdown in the first quarter of the year. Moderate growth is expected for the rest of 2015.”