Scottish economy 'thriving' - report Published duration 10 August 2015

image copyright Getty Images

Scotland's economy is thriving despite global economic unrest, according to a business survey.

The research by accountants and business advisors BDO pointed to a rise in output levels as evidence of a "summer of success" for Scottish businesses.

A separate survey by the Bank of Scotland also suggested economic output had increased.

But both reports suggested there had been a fall in employment levels.

Martin Gill, head of BDO LLP in Scotland, said: "Political certainty has bolstered short-term business confidence. The result is a thriving economy, despite global economic unrest.

"However, as business success continues to exceed other markets, the strong pound will make it harder for our exporters - particularly manufacturers - to find customers. We can't let confidence tip over into complacency; keeping us competitive should be a government priority."

'Return to growth'

Donald MacRae, chief economist at Bank of Scotland, said its PMI figure for July - which is based on survey data from approximately 600 companies - 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," he said.

"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."

The Bank of Scotland PMI report for July found private firms "reported further growth of output and new orders".

In the service sector the amount of new business placed with companies grew for the fifth month in a row, while the manufacturing sector reported a rise in output in July, reversing the trend for the past three months.

Employment levels

Manufacturing firms also saw a growth in new orders last month, following a decline in June.

But the report said: "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."

While it said that some companies "linked job cuts to internal restructuring efforts" it added that the "rate at which workforce numbers were reduced was modest".

BDO's research also indicated a growth in output but a fall in employment levels, with the output index up to 104.4 in July - an increase on the previous month's total of 104.1 and higher than the 103.7 recorded 12 months ago.

The latest employment index was recorded at 108.4, compared to 109.1 in June and 109.6 in July 2014.

'Encouraging'

Reacting to the Bank of Scotland PMI report, Deputy First Minister John Swinney said: "This survey is further welcome evidence of the strengthening of Scotland's economy, with the strongest PMI output reading of 2015 so far and an improvement reported in new orders across both manufacturing and services.

"While the data points to a slight dip in staffing levels in the services industry, it is encouraging to see manufacturers increasing their hiring activity and falling cost pressures across all sectors.