SCOTTISH companies achieved a return to growth in overall turnover in the latest three months, but the production sector remained weak as services firms drove the improvement, a key survey has revealed.
Bank of Scotland's latest business monitor, which is conducted by Strathclyde University's Fraser of Allander Institute, also shows that Scottish companies' exports fell sharply in the three months to May.
And companies predict a further fall in overseas sales in the face of a raft of challenges, including the strength of the pound against the euro.
Of the 401 survey respondents, 36 per cent achieved a rise in turnover in the three months to May and 29 per cent experienced a fall, with the remainder reporting an unchanged position.
The resultant balance of seven per cent of Scottish companies reporting an increase signals a return to growth of overall turnover in the Scottish corporate sector.
Bank of Scotland's previous quarterly survey showed the economy north of the Border stagnating in the three months to February, as the lower drink-drive limit hit the hospitality industry and the production sector contracted.
While the latest survey findings are an improvement on the equal proportions of Scottish companies reporting rises and falls in turnover in the three months to February, they are far less strong than those at the same time last year.
A balance of 28 per cent of Scottish companies had reported a rise in turnover in the three months to May last year.
And the production sector continued to contract in the three months to May, the latest Bank of Scotland survey signals.
A balance of two per cent of Scottish production companies reported a fall in turnover during the latest three months.
However, in the Scottish services sector, a net 14 per cent of companies reported a rise in turnover during the three months to May.
The latest survey signals a significant deterioration in the export picture.
A balance of 24 per cent of Scottish companies reported a fall in export activity in the three months to May. In the preceding three months, a net six per cent had reported an increase in exports.
Bank of Scotland says: "Exporting to eurozone economies should become easier as growth picks up in many of the currency bloc's member countries but is being hampered by the rise of sterling against the euro as quantitative easing takes effect [in the single currency zone]."
A balance of six per cent of Scottish companies predicted a fall in export activity over the coming six months.
Analysing the trend, Bank of Scotland says: "The business monitor showed the Scottish economy starting to slow in the second half of 2008. Following the worst-ever result at the end of that year, there was a gradual improvement until the early part of 2010. For the next two-and-a-half years, the monitor showed an economy largely stagnating.
"Last summer's monitor showed an economy accelerating into growth. The recovery continued in spring, summer and autumn 2014 but paused at the start of this year before picking up again in spring."
Donald MacRae, chief economist at Bank of Scotland, said: "The Scottish economy slowed at the start of 2015 but is expected to return to moderate growth in spring and summer. Expectations remain close to pre-recession levels, suggesting that growth will pick up in the second quarter of the year."
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