By Tom Barry
The good news came in a Bank of Scotland PMI report carried out in February and provides a welcome boost for the Scottish economy which has been hard hit in recent times by government spending cuts, a fall in consumer spending and a generally volatile and fragile global economic climate.
The sector’s PMI – a seasonal index which monitors activity across the country’s manufacturing and service industries – rose to 55.9 last month from 52.9 in January.
Respondents to the report indicated that they had returned to ‘business as usual’ in the aftermath of the adverse weather conditions that hampered manufacturing and retails sales at the turn of the year. Growth in new order levels over the past number of months was also accredited with aiding the rise.
Donald MacRae, the chief Economist at Bank of Scotland, said: “This is a welcome second month of growth in the private sector of Scotland’s economy following the winter downturn. February signalled the strongest rise in activity across the private sector economy since June 2007, with firms recruiting for the first time since last October. Crucially, the services sector expanded with all three sub-sectors experiencing growth. Although cost pressures slipped from last month’s high, they remained strong.”
He added: “Recovery was led by manufacturing, with the strongest monthly rise in output since the report’s inception in 1998. For the first time in six months, performance in Scotland was stronger than that registered for the UK as a whole. However this needs to be maintained throughout the year, not just as the weather improves, to counteract the effect of public spending cuts.
“The recovery continues to be uneven and least robust in the services sector.”
Scottish Enterprise Minister Jim Mather echoed the sentiments of Mr MacRae and commented on how Scotland was leading the UK in term of private sector expansion: “This is further evidence that Scotland’s economic picture is strengthening. Private sector output in Scotland is expanding at its fastest rate since June 2007. This compares with a slower rate of expansion in private sector output across the UK. And Scotland is the only UK nation with rising employment and falling unemployment.”