Mixed news for manufacturers

Scottish manufacturers remain upbeat about their near-term prospects, despite declines in output and orders in the three months to April, according to the latest snapshot from the CBI.

The business group’s industrial trends survey for Scotland shows that growth in both domestic and export orders slowed sharply on the quarter.

While firms expect the domestic market to stabilise over the next three months, export order growth is forecast to rebound and export optimism for the year ahead has risen sharply. Although output growth fell at the fastest pace in two years, manufacturers expect output to grow strongly over the coming three months.

Optimism, meanwhile, rose at the fastest pace since July 2014, but failed to lift investment spending – spending intentions for both buildings and plant and machinery remained well below their long-run averages.

Hiring is expected to grow strongly, having been steady during the latest quarter.

Price pressures remained high in the three months to April, with average domestic price growth rising at its strongest pace in almost five years. Growth is expected to pick up further next month to the fastest since 1990 as unit cost growth remains elevated.

Tracy Black, CBI Scotland director, said: “Optimism among firms has picked up further and manufacturers are optimistic about the quarter ahead.

“Nonetheless, this quarter’s decline in output and domestic orders, coupled with weak investment plans, should act as a wake-up call for policy makers who should act now to champion Scotland as a great place to invest and grow.

“With transition now agreed, hopefully firms can concentrate more on improving productivity growth through increasing investment in skills and more efficient plant and machinery.”