Scotland’s economy continues to grow at record pace

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  By Russell Bruce
 
Following record growth in August, September’s Purchasing Manager’s Index (PMI) shows the all time survey-record has been matched for a second month with strong growth in output and new business.
 
As our graph shows the Scottish private sector has been expanding at a steady pace over the last 6 months.  Maintaining last month’s strong growth rate is encouraging given the slow and stuttering rate of economic recovery in the UK.

The overall rate of growth stands at 58.3. The service sector hit 59.6 in September whilst manufacturing slipped back to 53.4 from 56.7.

The index records no change from the previous month as 50. Any figure above 50 shows higher output than the previous month. A figure below 50 indicates a reduction in output from the month before. Markit Economics, who conducts the survey for Bank of Scotland, survey 600 private sector firms across Scotland every month.

Scottish manufacturers have been reporting growth over the last 6 months and are also continuing to recruit and have reported higher employment figures every month since February indicating confidence in the growth trend going forward.

Scottish firms reported record rates for new business at 58.6 and also recorded higher backlog levels, no doubt contributing to the continuing higher recruitment levels across both the service and manufacturing sectors. Employment has been in positive territory over the six-month period in the report and stands for the second month at a record 53.4.

During May and June manufacturing reported lower levels of new export orders but has moved into positive territory over the last 3 months which the report describes as solid in the context of historical survey data.

Commenting on the survey, Donald MacRae, Chief Economist at Bank of Scotland, said: “September’s PMI showed the private sector of the Scottish economy continuing to expand across both manufacturing and service sectors providing further evidence of the strengthening of the recovery.

“Output and new business rose at survey-record equalling rates accompanied by growing employment and rising new export orders. The PMIs of the last six months suggest the Scottish economy not only grew in quarter two this year, but saw that growth accelerate in quarter three.”

Mr MacRae added “The recovery is gaining momentum.”

Scotland’s Enterprise Minister Fergus Ewing welcomed the survey results.

He said: “This was the 12th consecutive month of private sector output expansion, with growth seen in both services and manufacturing.

“We are seeing ongoing signs of recovery and Scotland continues to outperform the UK on our employment rate, youth unemployment rate and annual output growth.

“We will continue to build on that momentum, supporting an investment-led recovery, taking action to boost jobs, create more economic opportunities and enhance business confidence.”