Business activity growth stuttering

Sep 10 2012

Private sector business activity increased at the weakest rate for 20 months, according to a survey.

The loss of momentum reflects a drop in new work, the Bank of Scotland said. Its research shows only a marginal increase in total activity across manufacturing and services, below the UK-wide average.

Donald MacRae, chief economist at the bank, said there was 20 months of growth.

"However, manufacturing output fell and new domestic and export orders decreased, although employment continued to grow in the service sector," he said. "The Scottish economy is struggling to maintain growth momentum in this latest slowdown."

The amount of new work placed with Scottish businesses fell for the second month running in August. The overall rate of decline accelerated from July to the fastest recorded since December 2010.

Five other UK regions saw reductions in new work but only Northern Ireland posted a more marked drop than Scotland.

Finance Secretary John Swinney said: "Scottish private-sector business activity continued to increase in August for the twentieth consecutive month but the rate of expansion is slowing.

"We are doing all we can within our current powers to strengthen the economy, to create and bring jobs to Scotland, to stimulate growth, and to create the most supportive environment for business in the UK - and we are achieving results in terms of youth training, inward investment and help for the small business sector.

"But it is clear that much more could be achieved and the UK Government's repeated failure to give the green light to much needed capital investment is hampering progress. We need stimulus to capital investment by the UK Government to boost the construction sector and wider economy.

"Scottish GDP would have grown in the first quarter of the year if not for the problems that this hugely-important sector faces - and that is why we have called on the Chancellor to invest an extra £5 billion in capital projects, including the 'shovel ready' projects that we have identified in Scotland."