SCOTTISH manufacturers suffered an accelerating decline in domestic orders and output volumes in the latest three months, amid plunging optimism, a survey has revealed.
The survey, published yesterday by the Confederation of British Industry in Scotland, underlines the scale of the challenges facing the economy, as the UK Government continues with its severe austerity programme.
CBI Scotland's latest quarterly industrial trends survey showed that, subtracting the proportion of manufacturers north of the Border reporting a rise in output volumes from that experiencing a decline, a net 23% suffered a fall in the latest three months.
This marked a significant deterioration from the net 11% reporting a drop in output volumes in the previous quarterly survey, and signalled a sharp acceleration in the rate of decline.
The survey, conducted between March 21 and April 10, also showed a net 36% of Scottish manufacturers reported a fall in domestic orders in the latest three months.
This represented a significant worsening from the net 15% reporting a fall in domestic orders in the previous quarterly survey, and underlined the weakness of the UK economy. CBI Scotland said the latest decline in domestic orders was "broad-based" across manufacturing.
A net 30% of Scottish manufacturers reported they were less optimistic about the business situation than three months earlier.
CBI Scotland director Iain McMillan declared the survey findings were "disappointing".
The survey showed marginal growth in employment in Scottish manufacturing in the latest three months, with a net 3% of respondents reporting a rise in staffing.
And it showed a marginal increase in export orders for Scottish manufacturers in the latest period, after a fall in the previous three months. A net 3% of survey respondents reported a rise in export orders, compared with a balance of 9% posting a fall three months earlier. CBI Scotland cited the food and drink sector as one which had enjoyed a strong performance on the export front.
However, a net 12% of Scottish manufacturers reported a fall in total new orders. Although this was not as bad as the balance of 23% reporting such a position three months earlier, Scottish manufacturers have now signalled a decline in total new orders for four consecutive quarters. The run of decline in their domestic orders is even longer.
Mr McMillan said: "There is no getting away from the fact that these latest findings are disappointing, with the slight growth in exports more than outweighed by the continuing marked decline in new domestic orders."
The fall in manufacturing output volumes in Scotland in the latest three months contrasted with the situation in the UK as a whole, and the decline in domestic and total new orders was sharper north of the Border. In the CBI's UK-wide industrial trends survey, also published yesterday, a net 5% of manufacturers reported a rise in output volumes. UK-wide, respective balances of 14% and 6% reported falls in domestic and total new orders.
However, Scotland fared better on the export front. In the UK-wide survey, a net 3% of respondents reported a drop in export orders in the latest three months.
Asked about the performance of manufacturing sub-sectors north of the Border in the latest three months, CBI Scotland assistant director David Lonsdale said: "The fall in domestic new orders was broad-based, with all sectors reporting a decline; but roughly half of sectors saw an increase in new export orders, with the largest, food and drink, among those reporting growth."
Scotland, unlike the UK as a whole, is clear of any immediate danger of triple-dip recession, with official figures last week revealing 0.5% growth in the fourth quarter of 2012 as renewable energy output increased and the service sector expanded.
News of this strong quarter-on-quarter rise in Scottish gross domestic product came as a surprise, given the 0.3% fall in UK-wide GDP in the final three months of last year.
Figures due tomorrow will reveal whether or not the UK as a whole suffered a second consecutive quarter of contraction in the opening three months of 2013. A fall in GDP in the first quarter would mean the UK had suffered its third recession since 2008.
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