SCOTLAND'S economy is continuing to bump along a path of little or no growth, according to the latest Scottish Chambers of Commerce (SCC) quarterly survey.
The research, conducted in partnership with the University of Strathclyde's Fraser of Allander Institute, found low domestic and consumer demand constrained activity in most sectors except oil and gas in the first three months of this year.
Worryingly, the majority of businesses do not expect any significant improvement in conditions over the next 12 months.
As a result companies are holding back on non-essential investment and have little intention of hiring more staff.
Garry Clark, head of policy and public affairs at SCC, said: "If Scotland is to return to trend levels of growth of 1%-1.5% per year or more, then further efforts will be required by government at all levels to stimulate demand.
"The Scottish Government and, more recently, the UK Government have now recognised the value of focusing resources on capital spending and investment.
"This must be accelerated and government must also look at how it can reduce the cost base for business, including action to reduce the impact of business rates."
Although activity between January and March remained weak, the trends in manufacturing, construction and tourism were not as poor as forecast.
The net balance – the figure for firms expressing positive sentiments against those holding negative views – of confidence in tourism business was positive for the first time since mid-2011.
Although average room rates and hotel occupancy were in negative territory, they were much improved from the net balances recorded for the final three months of 2012.
Manufacturing was the most positive sector with confidence at a net 18.6%, which was up from 1.1% at the end of last year. The net balance of total new orders moved into positive territory mainly thanks to a large increase in exports, at 14% from -6.1%, which offset weaker demand from the UK and Scotland.
A net 18.8% of manufacturers expect to increase turnover in the coming year, with overseas orders forecast to continue rising.
While construction confidence stayed in negative territory it improved from -25.8% to -10.7%.
Private commercial work was the only area of trade in positive territory although public sector and domestic and housebuilding were much improved from the last quarter of 2012.
There was a surprising 10.7% increase in employment but the uplift is expected to be temporary with a net 4.5% expecting a decline in the three months to June this year. In retail, optimism slid from -41.2% to -45.2%, while it was a similar trend in wholesale where confidence went from -35.3% to -43.7% as weak consumer confidence continued to affect businesses in those sectors.
The SCC report said: "The trends, with some exceptions, most notably oil and gas-related manufacturing, are largely unchanged from a year ago, and are indicative of below trend growth continuing and of an economy bumping along the bottom of a recession rather than any substantial sense of a real recovery."
Mr Clark added: "Businesses will find opportunities where they can, but the muted signs of improvement in our economy as we enter the spring can only be sustained and strengthened when businesses and consumers alike have the confidence to spend and invest."
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