GROWTH of the Scottish private sector eased in April to its slowest monthly pace so far in 2014, a key survey reveals.
And the rate of expansion of output in Scotland last month was well adrift of the rate in the UK as a whole, according to the latest Bank of Scotland Purchasing Managers' Index (PMI) report published today.
The pace of growth of output in both services and manufacturing in Scotland eased in April. And the survey shows that new export orders for Scottish manufacturers have now fallen for three consecutive months.
Loading article content
Bank of Scotland chief economist Donald MacRae cited the strength of sterling as a possible contributor to the fall in new export orders.
A stronger pound makes manufacturers in Scotland, and elsewhere in the UK, less competitive in overseas markets.
The headline PMI output index for the Scottish private sector economy fell from 56.4 in March to 54.8 in April on a seasonally adjusted basis.
While well above the level of 50, which is deemed to mark expansion from contraction, and thus continues to signal a solid rate of growth, the latest Scottish PMI output index reading was well adrift of a corresponding figure of 59.2 for the UK as a whole. Also, the gap between the output growth rates in Scotland and the UK as a whole widened significantly between March and April.
The survey, which covers only private sector activity, shows that the pace of increase of the services' workforce in Scotland eased in April.
However, the manufacturing sector north of the Border increased employee numbers at a faster pace last month.
The overall rate of increase of the Scottish private sector workforce in April was the slowest since January.
However, the Bank of Scotland noted the survey showed companies had now added to their payroll numbers in 17 consecutive months.
In spite of the slowdown last month in the pace of growth in Scotland's private sector to its weakest since last December, Mr MacRae believed the latest survey continues to point to a broad-based recovery.
He said: "April's PMI was a solid 54.8, indicating continuing growth in the Scottish economy in the month.
"The recovery is broad-based with output growing in both [the] services and manufacturing sectors, accompanied by rising employment and a growing level of new business. A strong pound may be contributing to new export orders falling marginally for the third consecutive month."
In spite of the fall in new export orders, Scottish private sector firms enjoyed an overall acceleration of growth in new business in April.
The new business index for Scotland rose from 55.4 in March to 57.7 in April. The latest reading signalled the fastest pace of increase of new business for Scottish companies since January.
Bank of Scotland noted the surge in new business in April, coupled with slower employment growth, had contributed to a further accumulation of backlogs of work for companies. The survey shows backlogs of work rose in April at the fastest pace in seven months.
Bank of Scotland believed the increased pace of growth in new business, and faster rise in backlogs of work, pointed to the economic upturn being sustained.
Meanwhile, more than four-fifths (86%) of small and medium-sized enterprises (SMEs) in Scotland are preparing to invest in their businesses this year, with new equipment, staff training and hiring staff topping their shopping lists. On average, SMEs plan to invest 9% or £7bn of their turnover, the research from Clydesdale Bank found.