Scottish economy stable?

The latest Purchasing Managers’ Index survey (PMI) from the Bank of Scotland seems to show encouraging signs of life in the Scottish economy. No-one is claiming to see anything like the much hoped for green shoots of recovery but the news is welcome nonetheless

Based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 600 private manufacturing and service sector companies in Scotland, the PMI figures show output increasing for the twelfth month running and new business up at the sharpest rate since April 2011.

The headline facts are that Scottish firms recorded the first increase in new business for four months in December and business wins rose at the fastest pace since April 2011. Growth was confined to the service sector, however, where product launches and successful marketing led to a robust month-on-month increase in new work. New orders placed at manufacturers continued to fall, albeit at a slower rate.

Output growth edged up for the second consecutive month in December, but remained shy of the pace of expansion registered in the first half of 2011. This was signalled by the Bank of Scotland PMI posting 51.2, up marginally from 51.1 in November. Any figure over 50 signals growth. The UK as a whole, however, performed even better, expanding solidly on the month.

Donald MacRae, Chief Economist at Bank of Scotland, said: ‘The PMI has been positive (above 50) for all 12 months of 2011 indicating growth in the private sector of the Scottish economy. However, the last four months have seen a slowdown with December’s result just positive at 51.2.

‘A pickup in the services sector at the end of last year has compensated for falling output and export orders from a manufacturing sector suffering from the slowing of the Eurozone economies. The increase in new business for the first time in four months is very welcome and suggests the Scottish economy, while struggling to grow, is avoiding a fall in output.’

The Scotsman has a report with comment from the Scottish government here.