SCOTTISH economic recovery resumed in the three months to May but at a weak pace, following a grim winter, according to a survey published today by Lloyds TSB Scotland.
Professor Donald MacRae, chief economist at Lloyds TSB Scotland, saw evidence of a “slow and muted recovery” north of the Border in the findings of the Lloyds Banking Group unit’s latest quarterly business monitor.
He cautioned: “This fragile recovery will be restrained by the planned cuts in Government spending during 2011.”
However, Mr MacRae raised his prediction of Scottish economic growth this year from the 1.1% rate he forecast three months ago to 1.25%.
He increased his forecast in spite of a recent raft of weaker economic data and survey evidence for Scotland and the UK as a whole.
But his revised 1.25% projection is still well adrift of a long-term annual trend rate for Scotland which was estimated at about 2% before the deep recession.
The rate of growth in the three months to May signalled by the numbers in the Lloyds TSB Scotland monitor appears to be, at best, marginal.
Subtracting the 31% of firms which reported a fall in turnover in the three months to May from the 33% enjoying a rise, a net 2% achieved an increase.
However, while this pointed to only marginal growth, it was a vast improvement on the net 20% of firms which reported falling turnover during the three months to February.
And it was also the best reading for this question in the last three years.
A net 1% of firms reported a fall in business volumes during the three months to May, signalling marginal contraction on this measure. However, this was also a major improvement on the balance of 21% of firms reporting falling business volumes in the previous quarterly survey.
Lloyds TSB Scotland attributes the poor economic showing signalled by its survey for the three months to February to severe winter weather.
Its latest survey signals manufacturing remains in stronger shape than the dominant services sector.
A net 3% of manufacturers reported a rise in turnover in the three months to May, while a balance of 1% of services firms enjoyed an increase.
Mr MacRae said survey respondents’ expectations for the coming six months were at their highest level for 13 quarters, with a net 7% of firms predicting a rise in turnover.
However, he noted this balance was “around a fifth of pre-recession levels, indicating a slow and muted recovery”.
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