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Scotland sees strong private sector growth

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  • 14/03/2011
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Scotland sees strong private sector growth
Business activity in Scotland rose in February at its strongest pace in forty-four months, new research has shown.

According to the Bank of Scotland’s purchasing managers index (PMI), private sector firms raised staffing levels for the first time in four months, but at a modest pace and mostly in manufacturing.

The PMI – a seasonally adjusted index monitoring activity across Scotland’s manufacturing and service industries – rose from 52.9% in January to 55.9%.

The index revealed that the growth was spurred on by manufacturing which recorded the strongest monthly rise in output since data was first collected in January 1998.

Survey respondents indicated that a return to ‘business as usual’ following adverse weather at the turn of the year and growth in new order levels had driven the overall rise.

In turn, panel members reported that improved demand and clients loosening budget controls had driven an increase in new order levels in February.

It added that although weaker than the rise seen across the UK as a whole, new business growth in Scotland was the strongest for a year.

Donald MacRae, chief economist at the Bank of Scotland said: “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.

“Recovery was led by manufacturing, with the strongest monthly rise in output since the report’s inception in 1998.”

He added: “For the first time in six months, performance in Scotland was stronger than that registered for the UK as a whole.

“This needs to be maintained throughout the year, not just as the weather improves, but to counteract the effect of public spending cuts,” he explained.

MacRae said that while Scottish business activity has shown improvement, the recovery continues to be “uneven and least robust” in the services sector.

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