Scots service sector is weakest in the UK

Group Business Editor

Tuesday 2 October 2012

THE services sector performed much worse in Scotland than in any other part of the UK in the third quarter, while manufacturers north of the Border suffered tumbling exports, a survey by the British Chambers of Commerce reveals today.

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ian mcconnell business editor

Scotland's poor service sector showing stands out even in the context of a survey which, according to British Chambers, shows the overall UK performance "remains weak and inadequate".

It is worrying for the overall picture, given that the sector is the largest part of the economy.

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "The survey results continue to underscore the fragile state of the Scottish economy in 2012, and highlight the need for the Scottish and UK governments to focus their efforts on supporting business growth."The survey shows Scottish services companies, overall, suffered the fastest fall in domestic orders and sales anywhere in the UK in the third quarter.Subtracting the proportion reporting a rise from that experiencing a fall, while adjusting the findings to give larger companies a greater weighting, respective balances of 35% and 26% of Scottish services firms suffered a drop in sales and orders in the UK market-place in the third quarter.These latest declines followed sharp overall falls in Scottish services firms' domestic sales and orders in the second quarter.UK-wide, a weighted net 1% of services firms reported a rise in domestic sales. A balance of 2% posted a fall in domestic orders.Scotland was the only part of the UK in which services firms, overall, reported a drop in staffing in the third quarter and predicted a further fall in employee numbers during the coming three months.Services companies in Scotland were also less confident than their peers in any other part of the UK. Respective weighted balances of 20% and 26% of Scottish services firms predicted turnover and profitability would worsen over the coming 12 months.Scotland had the lowest proportion of services companies which said they were trying to recruit, at 25% on a weighted basis.In manufacturing, a weighted net 13% of Scottish firms reported a fall in export orders during the past three months. This was worse than in any other part of the UK and in contrast to the weighted net 23% of Scottish manufacturers which reported a rise in export orders during the second quarter.Only a weighted net 2% of Scottish manufacturers reported a rise in domestic orders during the third quarter. While this was not as bad as some other parts of the UK, it represented a significant deterioration from the weighted balance of 35% of Scottish manufacturers experiencing such an increase in the three months to June.A weighted net 3% of manufacturers in Scotland reported a rise in domestic sales in the third quarter, down from a corresponding balance of 27% posting an increase in the three months to June.Ms Cameron said: "The fall in balances for manufacturing deliveries and orders is of particular concern, but they remain in positive territory despite continuing uncertainty over global economic prospects."While chambers gave a cautious welcome to the Scottish Government's plans to reform public sector procurement earlier this year and wider moves to increase investment in infrastructure, more could be done to boost our country's economy. "The UK government needs to be more strategic about its initiatives, focusing them into a coherent strategy for growth."

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Scots service sector is weakest in the UK

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