Scottish business sees summer surge as Murray wins Wimbledon

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  By Russell Bruce
 
Not that the two events are connected, at least not yet, but anything that sees Scotland’s profile raised is good for business and employment so there may be a Wimbledon bonus in the months ahead.
 
The latest Bank of Scotland Purchasers Managers Index (PMI) for June is showing the largest rise in business activity since May 2007, a record increase in new work and job creation at a 14 month high.

The marked increases in business activity and new work led firms to raise employment levels, as backlogs of work accumulated for the first time in close to two years.  Input prices faced by businesses meanwhile rose at a slightly faster pace, though competitive pressures ensured output price inflation remained muted.

The combined services and manufacturing index, for Scotland, rose for the third straight month to 57.0, up from a reading of 54.4 in May and at a slightly faster expansion than across the UK as a whole over the month.

Purchasing Managers Indexes use a score of 50 as no change on the previous month.  A recording of below 50 shows a fall from the previous index and a figure above 50 shows an increase over the previous month’s result.

PMIs are conducted for all countries and are highly regarded as a measure of business activity.

June saw a welcome steep rise in the manufacturing sector, which has reported positive, but slow growth since the start of the year allowing it to catch up with the year’s solid performance from Scotland’s service sector.

The higher levels of new business reported are especially welcome as an indicator of growing confidence going forward. With backlogs also growing after some decline in earlier months businesses are recruiting to cope with demand and turn round. 

The Bank of Scotland noted that this was the first such increase in backlogs in 22 months with a solid rate of accumulation the sharpest in over six years.

Donald MacRae, Chief Economist at Bank of Scotland, said: “June’s PMI rose to the highest level since May 2007, signalling a sharp acceleration in growth of the private sector of the Scottish economy in the month.  Both the services and manufacturing sectors recorded rising activity and output, accompanied by growth in employment.

This growth spurt is domestic based with new export orders outwith the UK falling for the second successive month. Nevertheless, these results provide more welcome evidence of the growing strength of the recovery in the Scottish economy.”