Economic Recovery Continuing: Study

8 September 2014, 06:00 | Updated: 8 September 2014, 06:24

The recovery in Scotland's private-sector economy has continued, with employment rising at the fastest rate for six months, according to a report.

Business activity rose "solidly'' in August, with both manufacturing and the services sector contributing.

The Bank of Scotland August PMI report also recorded a "robust'' increase in incoming new business but was down slightly from the previous month.

Employment in Scotland has continued to rise for 21 consecutive months and August's rate was the most marked since February, and in excess of the UK average, according to the report.

The Bank of Scotland PMI - a single-figure measure of the month-on-month change in combined manufacturing and services business activity - was at 54.6 in August, down slightly from a six-month high of 56.8.

Donald MacRae, chief economist at Bank of Scotland, said: "August saw a broad-based rise in business activity across both the services and manufacturing sectors.

"Employment rose at the fastest rate for six months, confirming continuing high levels of business confidence.

"The Scottish economy continues to recover and grow in the second half of 2014.''

It comes as another report recorded a slight fall in business confidence.

Business advisers BDO said slow growth in the eurozone and the ongoing conflict in Ukraine have had an impact on future growth of Scottish businesses.

The BDO "Optimism Index'', which looks at how well firms expect to perform over the next six months, is still above the 100 mark that indicates long-term average growth, but it fell for the first time in six months to 105.0 in August, down 0.1 from July.

The report's employment index, which predicts companies' hiring intentions over the next three months, grew from 109.6 to 111.2 in August, the seventh month of growth in a row.

Martin Gill, head of BDO in Scotland, said: "After a strong start, the rest of 2014 is looking increasingly uncertain for businesses, with manufacturers being most affected.

"With anaemic growth enduring in our key trading partner - the eurozone - and external shocks such as the crisis in Ukraine further dampening confidence, no-one should be surprised to see growth impacted in (the second half of) 2014.

"An important knock-on effect in this regard relates to the Bank of England's deliberations around interest rates.

"With weak demand in Europe keeping cost pressures on firms very low and domestic threats such as an overheating housing market seemingly largely under control, there seems to be very little in the short-term that would necessitate an interest-rate rise.

"The consensus is that rates will rise in Q1 2015. However, it would be no surprise if this moves back to later in 2015.''