Fall in manufacturing despite overall growth for Scots economy

Scotland's manufacturers continued to report downbeat trends last month, according to the monthly survey of purchasing managers.

The monthly monitor of private sector activity found the larger services sector growing, but with its costs on the rise, mainly due to rising pay.

Service businesses have been winning new business and taking on more staff.

The overall figure for the Scottish private sector continued to grow in June, but was still weaker than May.

The second quarter of the year has seen a pick-up from more disappointing figures in January to March.

UK employment stronger

The purchasing managers index (PMI) shows growth if it is above 50, and the Scottish output figure for the private sector economy in June was at 51.2, down from 51.9.

That contrasts with the UK figure, which reached 57.4 in June, up from 55.8 - the lowest point it has been at this year. Employment figures in the PMI surveys are notably stronger for the UK as a whole.

The Bank of Scotland survey showed that the strength of sterling, and the slowdown in the oil and gas sector, weighed on manufacturing.

Manufacturing output was lower for a third month in a row during June, in line with a further drop in new orders received.

June was the fourth month this year that manufacturing employment numbers have been falling, though 78% reported there was no change.

'Moderate recovery'

Where there were reductions in staffing, these were seen as a way to improve efficiency.

Donald MacRae, chief economist at the Bank of Scotland, said: "June was another month of growth continuing the pick-up in activity starting in April. But the growth appears confined to the services sector.

"In contrast, manufacturing showed declining output, employment and new orders. New export orders showed a fifth consecutive monthly fall, illustrating the challenge of exporting with a strong pound sterling.

"The Scottish economy continues to make a moderate recovery from the slowdown of the first quarter."