The latest Scottish Business Monitor from the Bank of Scotland should that business has continued to report a growth in turnover through the autumn, continuing the strong improvement already seen in the summer. Although exports remain weak (an area of continuing concern), the Bank says that expectations are high for the recovery to continue into 2014.
In the three months ending in November, over a third of firms surveyed (37%) increased turnover, 41% experienced static turnover, and 22% saw it fall. This is the second best result in six years and shows signs of a return to the pre-recession levels of 2007.
Both manufacturing and service sectors performed well, though both were down on the summer’s exceptional levels. Nonetheless, they were but well up on the figure seen over the same quarter a year ago.
An important indicator was that volumes of repeat business rose strongly during the summer months and remained high. Trends in the volume of new business have eased; but the level of new business identified in the latest quarter suggests the recovery will be maintained into 2014.
Export activity had plunged at the end of 2011 but a recovery set in at the beginning of 2012. This stopped in the middle of the year and then deteriorated further in the autumn. The overall net balance for export activity in the latest three months was well down and produced the most negative trend in this latest Business Monitor.
Expectations for turnover in the coming six months are positive. Once again, over a third (36%) expect turnover to increase against a fifth who expect a decrease; the rest expect it to remain static. Service firms are slightly more optimistic than those in manufacturing.
More encouraging are the estimates for exports over the next few months. Companies are at their most optimistic for years, with their expectation for future export activity remaining at the second equal highest since 2005.
In the view of Professor Donald MacRae, chief economist of the Bank of Scotland, “The surge in economic activity identified in summer 2013 has been maintained through to autumn with the latest quarter showing the second best result in six years. As a result, the Scottish economy should record a year of growth in 2013. Expectations for 2014 remain high suggesting the recovery will continue into 2014. Consolidation of the recovery would be enhanced by firms increasing investment.”