Bank of Scotland says private sector growth continues

Output fell in the manufacturing sector after two months of growth

Output and employment are continuing to grow solidly in Scotland's private sector, according to new data.

Bank of Scotland analysis found expansion in output last month was only slightly down on March's 11-month high.

However, growth was concentrated in the services sector, with manufacturing output declining in April after two months of expansion.

The bank said the data encouraged hopes for a return to growth this year for the Scottish economy.

The bank's Purchase Managers Index, which monitors activity across Scotland's manufacturing and service industries, fell back slightly from March's 54.1 mark to 53.5.

Readings above 50.0 signal an increase or improvement, while readings below 50.0 signal a decline or deterioration.

It was the 16th straight monthly increase in total private sector output.

Behind the increase was a marked rise in service sector activity, with goods production falling slightly.

April also saw a further rise in new work placed at companies across Scotland, though the rate of increase was notably slower than in March.

Weaker expansion

Service providers reported a weaker expansion in new business and, despite seeing a rise in new export orders, manufacturers recorded a slight overall fall.

Job creation was maintained in April at a broadly similar rate to the previous survey period, with the past two months seeing the sharpest rise in employment in almost five years.

Mirroring the trends recorded for both output and new orders, rising staffing numbers at service providers more than offset a marginal fall in headcounts at Scottish manufacturers.

Bank of Scotland chief economist Donald MacRae said: "April saw the PMI reach its second highest level in nine months with the sixteenth consecutive month of expansion.

"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."

Finance Secretary John Swinney said the report showed "positive signs of economic recovery in Scotland's private sector".

He added: "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.

"This follows recent manufacturing export data which showed growth of 4.8% in 2011 and HMRC data saw Scotland's exports in all goods increase by 18% in 2011 - the largest rise of all four UK countries - demonstrating that Scottish government efforts to strengthen our economic links in overseas markets are paying off.

"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."