PRIVATE-sector companies in Scotland have expanded employment at the fastest rate since 1998 and confidence among small Scottish firms has also soared, according to reports published today.
The seasonally adjusted headline Bank of Scotland PMI (Purchasing Managers' Index) was measured at 56.2 in February, down slightly on the 57.2 reading for January.
The slowdown came in spite of an increase in output from Scotland's combined manufacturing and services sector.
February's decline, attributed to slower growth in goods production than during the previous month, came as the dominant service sector expanded at its most marked rate in four months.
The February report was marked by private-sector employment growing at its fastest in the survey's history, as firms in both the manufacturing and services sectors took on staff in February.
The growth was driven by the services sector, with staff hired to help companies handle workloads and in anticipation of activity continuing to grow in future.
Scottish firms reported an increase in their backlog of work for the ninth straight month in the February survey.
A sharp increase in new work secured by services firms powered underlying growth in the private sector, which was linked to increasing confidence and growing momentum in the housing sector.
The workload rise came amid rising cost pressure facing services firms, fuelled by increased demand, with the survey's input prices index rising to 60.8 in February from 58.7 the month before. Higher salaries were cited by panel member reports as the single biggest inflationary pressure, most acutely in the travel, tourism and leisure sectors, although rising food and fuel prices were also noted.
Rising demand, meanwhile, was found to have encouraged firms to increase their prices at the highest rate since July 2011.
The index for the average prices charged by Scottish firms increased to 53.7 in February, up from 51.9, with the data showing increases in factory gate prices and service sector tariffs.
But manufacturers reported a disappointing month on the export front, with new export orders falling for the third time in four months. The reversal came after the marginal gain made in February.
Donald MacRae, chief economist at Bank of Scotland, said: "February's PMI showed the private sector of the Scottish economy continuing to demonstrate strong growth.
"The rise in employment was the steepest in 16 years of the survey, while the improvement in new work was particularly strong among service businesses.
"The PMI for the last five months suggests the Scottish economy entered the spring of 2014 with sufficient growth momentum to have regained the peak level of output last achieved in mid-2008 before the recession."
Meanwhile, a separate report out today has found confidence among small Scottish businesses has risen to match the UK average.
The Voice of Small Business Index, from the Federation of Small Businesses (FSB), showed confidence among members rose in the first quarter of this year to the highest level since the date series began at the start of 2010.
The index measured +36 points in the most recent quarter, up 15 points on the previous measurement, putting it slightly ahead of the UK average of +35.7 points.
The report disclosed a net balance of 18% of small Scottish firms expected profits to rise in the next quarter, with a balance of 31% expecting turnover to increase.
Andy Willox, Scottish policy convenor at the FSB, said: "It is great news that Scottish small businesses are now as bullish as their counterparts elsewhere in the UK.
"We need to turn this vigour into growth and jobs - and we must see this trend continue for the remainder of the year. As trading conditions improve, it is vital that businesses are ready to cope with rising demand."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article