SCOTLAND’S economy is continuing its moderate recovery after a slowdown at the beginning of the year, according to a report.
Bank of Scotland’s monthly purchase managers index (PMI), which measures performance in manufacturing and services by gathering data from around 600 companies, signalled continued economic growth in June, although it was down slightly compared with the previous month.
The services sector was again the primary driver of expansion, recording an increase in activity in line with higher levels of new business.In contrast, there were marginal falls in manufacturing output and new orders, with reports that weakness in the oil and gas sector, plus unfavourable exchange rates, had weighed on demand.
The latest data shows staffing levels remained almost unchanged in June, although marginal growth means employment has risen for the fifth month in a row. Services remained the primary source of job creation, while manufacturers registered a slight fall in job numbers.
Service providers recorded a much steeper increase in their operating expenses relative to manufacturers, reported to be the result of higher salary costs.
Donald MacRae, BoS chief economist, said: “June was another month of growth continuing the pick-up in activity starting in April. But the growth appears confined to the services sector. Manufacturing showed declining output, employment and new orders. New export orders showed a fifth consecutive monthly fall, illustrating the challenge of exporting with a strong pound.”
But he added: “The Scottish economy continues to make a moderate recovery from the slowdown of the first quarter.”
Holyrood’s business minister, Fergus Ewing, said: “Whilst conditions remain challenging for manufacturers ... the composite indicator for new business signalled continued expansion and recent independent forecasts suggest a positive outlook for the rest of 2015.”
Meanwhile, business leaders have voiced fresh concerns about Government plans for a levy on larger employers to fund apprenticeships, saying it would not deliver the high quality training the country needs and would do little to help smaller firms.
Katja Hall, CBI deputy director-general, said: “The Government has set out its stall to create a high-skilled economy, but firms are facing a skills emergency now, threatening to starve economic growth.
“Worryingly, it’s those high-growth, high-value sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.
“The new levy announced in the Budget may guarantee funding for more apprenticeships, but it’s unlikely to equate to higher quality or deliver the skills that industry needs.
“The best way to plug the skills gaps and provide quality training is to speed up existing apprenticeships reforms already under way and encourage smaller firms to get involved.”
Rod Bristow, president of learning company Pearson, which helped with the research, said: “The Government is right to be ambitious about apprenticeships. We need more higher-level apprenticeships in high growth sectors like biotech, engineering, and technology, as well as traditional ones.”
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