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Growth rate speeds up in Scots private sector | Herald Scotland
Growth rate speeds up in Scots private sector | Herald Scotland
THE rate of growth in Scotland's private sector economy accelerated in February, when employers created jobs at the fastest rate for four years, according to the results of a closely watched survey.
growth area: There was a surge in new jobs last month in the financial services sector. Picture: Martin Shields
Research for the Bank of Scotland Purchasing Managers Index (PMI) shows the growth rate increased to a five-month high in February, amid signs the key services sector is enjoying an upturn in its fortunes.
With financial services firms leading the way, sector players increased employment at the fastest rate since July 2007, at the tail end of the credit-fuelled boom that ended with the credit crunch.
The results suggest the problems in the eurozone are posing challenges for manufacturing firms, which had been taking up some of the slack created by the contraction in the services sector following the financial crisis.
However, manufacturers recorded the first increase in output for three months in February.
The growth in both sectors powered an increase in the composite index measuring orders and activity to 51.7 in February from 51.4 the preceding month, taking the economy further away from the 50 mark that separates expansion from contraction.
The growth rate implied by the PMI remains sluggish.
However, Donald MacRae, chief economist at Bank of Scotland, said: "The PMI was positive for the fourteenth month in a row, signalling the private sector of the Scottish economy continues its slow recovery from recession. These results confirm the diminishing risk of a 'double dip' and increase expectations for a stronger recovery throughout 2012."
The Scottish Government appears to be working on the assumption that the Scottish economy is set on the road to recovery.
Last week the chief economist to the Scottish Government, Gary Gillespie, said Scotland was not at risk of lapsing into a double-dip recession.
However, Dr Gillespie said the country is not yet enjoying the kind of sustained recovery that is needed to reduce unemployment, and he warned the labour market will remain a key challenge for ministers.
Against that backdrop, ministers will likely welcome the improvement in the PMI readings for the important financial services sector. The employment index for financial services firms jumped from 50.6 in January to 54.7 in February, the strongest reading since June 2007. But staffing numbers in the manufacturing sector fell slightly, for the first time in two years.
Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "It seems likely that unemployment in Scotland will continue to increase this year, meaning that it is imperative action is taken to reduce costs on business and boost cash-flow at this crucial economic phase."
In a letter to George Osborne published today, the Chambers said the Chancellor must use the Budget he will announce next week to boost growth.
"Scottish Chambers of Commerce are arguing for a package of measures that would benefit a wide section of the business community in Scotland, principally through the acceleration of measures to ease access to credit and through a targeted and time-limited capital allowance scheme aimed at growth businesses and their supply chains. We are also seeking a lead from the UK Government on tackling the unwarranted 5.6% rise in business rates throughout the UK, due to take effect on April 1."
The overall growth rate in Scotland lagged behind the UK. However, as the UK output index reading fell to 53.6, from 55.9 in January, the gap between the growth rates in Scotland and the UK narrowed.
A survey by the Federation of Small Businesses (FSB) found that members north of the Border are more confident than the UK average. The FSB said confidence across the UK has bounced back from the record lows reported at the end of 2011.
But while a third of survey respondents said they were looking to increase capital investment, the FSB said expansion could be threatened by rising overheads, weak customer demand and concerns about the cost and availability of finance.
growth area: There was a surge in new jobs last month in the financial services sector. Picture: Martin Shields
Research for the Bank of Scotland Purchasing Managers Index (PMI) shows the growth rate increased to a five-month high in February, amid signs the key services sector is enjoying an upturn in its fortunes.
With financial services firms leading the way, sector players increased employment at the fastest rate since July 2007, at the tail end of the credit-fuelled boom that ended with the credit crunch.
The results suggest the problems in the eurozone are posing challenges for manufacturing firms, which had been taking up some of the slack created by the contraction in the services sector following the financial crisis.
However, manufacturers recorded the first increase in output for three months in February.
The growth in both sectors powered an increase in the composite index measuring orders and activity to 51.7 in February from 51.4 the preceding month, taking the economy further away from the 50 mark that separates expansion from contraction.
The growth rate implied by the PMI remains sluggish.
However, Donald MacRae, chief economist at Bank of Scotland, said: "The PMI was positive for the fourteenth month in a row, signalling the private sector of the Scottish economy continues its slow recovery from recession. These results confirm the diminishing risk of a 'double dip' and increase expectations for a stronger recovery throughout 2012."
The Scottish Government appears to be working on the assumption that the Scottish economy is set on the road to recovery.
Last week the chief economist to the Scottish Government, Gary Gillespie, said Scotland was not at risk of lapsing into a double-dip recession.
However, Dr Gillespie said the country is not yet enjoying the kind of sustained recovery that is needed to reduce unemployment, and he warned the labour market will remain a key challenge for ministers.
Against that backdrop, ministers will likely welcome the improvement in the PMI readings for the important financial services sector. The employment index for financial services firms jumped from 50.6 in January to 54.7 in February, the strongest reading since June 2007. But staffing numbers in the manufacturing sector fell slightly, for the first time in two years.
Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "It seems likely that unemployment in Scotland will continue to increase this year, meaning that it is imperative action is taken to reduce costs on business and boost cash-flow at this crucial economic phase."
In a letter to George Osborne published today, the Chambers said the Chancellor must use the Budget he will announce next week to boost growth.
"Scottish Chambers of Commerce are arguing for a package of measures that would benefit a wide section of the business community in Scotland, principally through the acceleration of measures to ease access to credit and through a targeted and time-limited capital allowance scheme aimed at growth businesses and their supply chains. We are also seeking a lead from the UK Government on tackling the unwarranted 5.6% rise in business rates throughout the UK, due to take effect on April 1."
The overall growth rate in Scotland lagged behind the UK. However, as the UK output index reading fell to 53.6, from 55.9 in January, the gap between the growth rates in Scotland and the UK narrowed.
A survey by the Federation of Small Businesses (FSB) found that members north of the Border are more confident than the UK average. The FSB said confidence across the UK has bounced back from the record lows reported at the end of 2011.
But while a third of survey respondents said they were looking to increase capital investment, the FSB said expansion could be threatened by rising overheads, weak customer demand and concerns about the cost and availability of finance.
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