Recovery gains pace as Scotland enjoys 16th consecutive month of growth

Economic progress: Figures show private sector moving in right direction.© STV

Scotland's private sector economy recorded its 16th consecutive month of growth in April, according to new data.

Analysis by the Bank of Scotland showed expansion in private businesses was concentrated in the service sector.

Overall the Purchase Managers Index (PMI) for April - a seasonally adjusted index monitoring activity across Scotland's manufacturing and service industries - was 53.5, down from March's 11-month high of 54.1.

The index numbers are calculated from the percentages of respondents reporting an improvement, no change or decline. Readings above 50.0 signal an increase or improvement; readings below 50.0 signal a decline or deterioration.

April's figure showed a further solid expansion in private sector output despite being slightly slower than the previous month. Job creation was also maintained at a broadly similar rate to that registered in the previous survey period, with the past two months seeing the sharpest rise in employment in almost five years.

Donald MacRae, the bank's chief economist, said: "April saw the PMI reach its second highest level in nine months with the sixteenth consecutive month of expansion. Growth was concentrated in the services sector with manufacturing output declining in April after two monthly periods of growth.

"New export orders grew for the second month in a row while employment grew in the month with the rate of job creation maintained. This result indicates the Scottish economy has negotiated the downturn at the end of last year with a minimum fall in output and encourages hopes for a return to growth in 2012."

The report found a further rise in new work placed at companies across Scotland, though the rate of increase was notably slower than in March. Service providers reported a weaker expansion in new business and, despite seeing a rise in their new export orders, manufacturers recorded a slight overall fall. Meanwhile, cost inflation eased again and, although still stronger than the UK level, was the weakest for 28 months.

Finance Secretary John Swinney said the report showed "positive signs" of economic recovery for the private sector.

He said: "The first fall in manufacturing output since January however is further evidence of the challenges facing the economy in the face of UK austerity measures. This Government and our enterprise agencies are doing all we can to support recovery, and to retain Scotland's position as the most competitive environment for business in the UK.

"Today's figures also show new export orders in manufacturing increasing for the second successive month in April pointing to an increase in new international business secured by Scottish firms." He added: "We continue to press the UK government to increase capital investment and have identified a £300m list of shovel ready projects, to support jobs and benefit communities all across Scotland. That investment is needed to put recovery on a firmer footing."

The Bank of Scotland PMI is produced by Markit and features survey data from around 600 companies based in Scotland and operating in manufacturing and service sectors.

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