14 February 2013

Scottish economy starts the year strong

Business growth is helping to fuel an economic resurgence in Scotland after PMI data from the national bank revealed private sector activity increased by the biggest amount in seven months during January.

The positive news will come as a welcome relief for the public and private sectors in the country, which battled several years of economic stagnation and low business confidence. The figures also revealed that output and new work picked up substantially, boosted by improved business conditions and extra pressure on operating capacity.

It is thought that the latest expansion in Scotland fits with a broader trend across the UK. Crucial data released this week (February 11th) has indicated that the UK is likely to avoid a triple dip recession, which will bring confidence back into the markets.

Bank of Scotland chief economist Donald MacRae said the Scottish economy had “gained momentum” in January.

He continued: “Both the level of new business and employment rose in the month but were concentrated in the service sector. The rate of decline in manufacturing output was modest and has eased since the previous month but export demand remains weak.”

The results indicate that the Scottish economy has not only started the year with strong growth but also maintained modest growth throughout the month. Firms have continued to create jobs, which has boosted employment numbers in the country, and the rate of inflation has also eased. However, the overall rate of net job creation was still modest and slower than the UK average, and output prices have increased on average.

PMI measured 52.3 in January, an increase from 51.2 in December. A reading above 50 indicates an expansion in the economy.