SCOTLAND'S manufacturing sector suffered a plunge in new orders and output in the latest three months, and was hit by renewed shedding of staff, according to a survey which underlines huge economic challenges ahead.
The survey, from the Confederation of British Industry in Scotland, highlights the weakness of the UK economy, with the plunge in overall new orders resulting from a tumble in domestic as opposed to export business.
While figures due today from the Office for National Statistics are expected to show a rebound in UK gross domestic product (GDP) in the three months to September, after three straight quarters of decline, economists have flagged the danger of a relapse as early as the final quarter of this year.
The drops in new orders and output in CBI Scotland's latest industrial trends report were much steeper than those signalled in a parallel UK-wide survey published yesterday by the CBI. CBI Scotland said it was unable to provide a "concrete reason" for this Scottish under-performance.
CBI Scotland director Iain McMillan said: "The dramatic decrease in total new and domestic orders is worrying."
He added: "These disappointing results show that manufacturing industry in Scotland faces an ongoing challenge from both the weak outlook for economic growth in the UK and continued uncertainty in the eurozone and internationally."
Subtracting the percentage of Scottish manufacturers enjoying a rise in total new orders in the latest three months from that suffering a decline, a net 36% reported a fall. This was a huge deterioration from a balance of 2% reporting a fall in new orders in the preceding three months.
A net 37% of Scottish manufacturers suffered a slide in domestic orders in the latest three months, while a balance of 9% reported a rise in export orders.
Meanwhile, a net 24% of Scottish manufacturers reported a slide in output volumes in the latest three months, pointing to a sharp decline. In the previous quarterly survey, a balance of 15% had reported a rise in output.
A balance of 2% of Scottish manufacturers reported a fall in employment in the latest three months. A net 9% had reported a rise in staffing in the previous quarterly survey.
While CBI Scotland found the manufacturing sector north of the Border achieved growth in exports in the latest three months, this was at a much slower pace than in the previous two quarterly industrial trends surveys.
CBI Scotland's survey presented a more upbeat view of overseas sales than less-timely figures from the Scottish Government yesterday showing a 4% quarter-on-quarter plunge in Scottish manufactured exports in the three months to June. While the official figures showed a 1.7% increase in Scottish manufactured exports, comparing the year to June with the preceding 12 months, falls have been recorded for three straight quarters. The second-quarter export level is the worst since late 2010 in real terms.
The Accountant in Bankruptcy provided some relief yesterday, reporting a sharp drop in corporate insolvencies in the three months to September from the record level reached in the second quarter. The AiB figures showed 274 corporate insolvencies in the three months to September, down 34.8% on the preceding quarter and 24.1% lower than in the same period of last year.
Bryan Jackson, corporate recovery partner with accountancy firm PKF, said: "After the record number of corporate failures in the first two quarters it was inevitable that the only way was down for the numbers. These figures are welcome but cannot conceal the underlying issues facing the Scottish economy."
The renewed recession has not been as deep in Scotland as UK-wide, based on official data so far. But Scottish GDP did fall 0.4% in the second quarter, after a 0.2% drop in the first quarter, and a 0.1% dip in the final three months of 2011.
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