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Manufacturing firms enjoy an acceleration in order growth

SCOTTISH manufacturers have enjoyed a sharp acceleration in growth of new orders, output volumes and employment in the past three months, a survey has revealed.

The survey, published yesterday by the Confederation of British Industry in Scotland, also shows manufacturers north of the Border anticipate further strong growth in output and employment in the coming three months.

However, while the pace of increase of new domestic orders picked up significantly, the rate of growth of incoming export business eased.

The CBI survey came hard on the heels of official data showing the volume of Scottish manufactured exports had fallen by 4% quarter-on-quarter during the final three months of last year.

The Scottish Government, publishing the manufactured export figures yesterday, highlighted the impact of the temporary closure in October 2013 of the Grangemouth refinery and petrochemical complex.

It highlighted the fact that the volume of refined petroleum, chemical and pharmaceutical product exports had tumbled by 20% quarter-on-quarter during the final three months of 2013.

Meanwhile, the drinks sector, which is dominated by the Scotch whisky industry, suffered a 5.8% quarter-on-quarter tumble in its export volumes in the closing three months of last year.

The volume of mechanical engineering exports fell by 3.5% quarter-on-quarter. And exports by the electrical and instrument engineering sector, which takes in the key electronics industry, dropped by 2.8% quarter-on-quarter in volume terms.

While acknowledging the setback in the fourth quarter, Scottish Finance Secretary John Swinney focused on a 1.9% rise in manufactured exports over 2013 as a whole. He declared that this was the fastest annual growth in Scottish manufactured exports since 2008, and described this as welcome news for businesses and the wider Scottish economy.

Mr Swinney said: "The temporary shutdown at the Grangemouth petrochemical complex has had a one-off impact on production and sales of refined petroleum, chemicals and pharmaceutical products. Given the sector accounts for almost a quarter of exports, this fall has had a significant impact on the overall figures. However, we expect these figures to bounce back in future results."

He added: "On food and drink, while there has been a fall in exports in the last quarter, this comes against a backdrop of continual growth, which saw exports reach one of the highest levels on record in the first quarter of 2013."

Mr Swinney also cited the impact of muted recovery in the euro area and volatility in emerging economies in the context of the fall in Scottish manufactured exports in the fourth quarter.

The CBI Scotland survey showed that, subtracting the proportion experiencing a fall from that reporting a rise, a net 23% of manufacturers north of the Border achieved an increase in the volume of total new orders in the past three months. This was a significant improvement on a balance of 6% in the previous quarterly survey.

A net 37% of Scottish manufacturers reported an increase in domestic order volumes, an improvement from a balance of 11%. However, only a net 6% reported a rise in export order volumes, down from a balance of 9% in the previous survey.

A net 36% of Scottish manufacturers reported a rise in output volumes in the past three months, up from a balance of 25%. And a balance of 32% reported an increase in numbers employed, up from a net 16% in the previous quarterly survey.

CBI Scotland's industrial trends survey, to which 31 Scottish manufacturing firms replied, showed respective balances of 50% and 32% of firms forecast increases in output volumes and numbers employed in the coming three months.

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