SCOTTISH business investment appears to be recovering, following a protracted period of weakness, a key survey signals.
The report, published today by Scottish Chambers of Commerce, ¬ ¬paints a mixed picture of the economy north of the Border. It highlights weakness in the construction and tourism sectors and underlines continuing challenges for retailers.
And, although the Scottish manufacturing sector remains in generally good shape with solid overall growth, it recorded a fall in sales revenue and orders from the rest of the UK in the first quarter.
The survey is conducted in collaboration with Strathclyde University’s Fraser of Allander Institute.
Professor Graeme Roy, director of Fraser of Allander, said: “Whilst weak business investment has been a feature of Scotland’s economy in recent times, the survey suggests that levels of investment have increased significantly…
“As we have previously highlighted, in times of uncertainty, it is important that businesses focus on the drivers of growth that they can control such as investing in their own productivity and efficiency, and in developing the skills of their workforce.”
READ MORE: Scots retailers struggle in spite of Easter boost
Mr Roy highlighted his view that “overall, the survey finds that Scottish businesses are remaining resilient to uncertain trading conditions”.
However, he emphasised the weakness of the Scottish construction sector had been a “major drag on growth” in recent times.
The survey signals construction activity remains fragile, with a fall in public sector orders.
Scottish Chambers declares: “Construction is the only sector not to have experienced significant upturns in investment into capital, training and other areas this quarter.”
Mr Roy highlighted the survey’s finding that “across all sectors, recruitment difficulties remain a concern”.
A raft of Scottish industry bodies and companies have highlighted their fears over the impact of Brexit on their ability to recruit the staff they need.
READ MORE: Scots economy flat but pick up projected
The Scottish construction sector signalled a fall in sales revenue in the first quarter, having posted a rise in the final three months of last year.
Growth of overall sales revenue in the Scottish financial and business services sector slowed appreciably in the first quarter but remained strong.
Scotland’s manufacturing sector also saw a sharp deceleration in growth of sales revenue in the first quarter. This was driven in large part by a decline in sales revenue from the rest of the UK, following a sharp rise in the preceding three months.
Growth in sales revenue in the Scottish retail and wholesale sector slowed sharply in the first quarter. And the tourism sector north of the Border recorded a further decline in its sales revenue in the first quarter.
In the Scottish manufacturing sector, 28.1 per cent of companies reported a rise in investment in the first quarter, with only 12.3% recording a decline and the remainder seeing an unchanged position.
The rounded net 16% recording a rise in investment in the first quarter was a significant improvement on the balance of 2% reporting an increase in the preceding three months.
READ MORE: Rumpus over Scots growth rate overdone by politicians
In the retail and wholesale sector, a balance of 23% of companies reported a rise in investment in the first quarter. In the preceding three months, a net 5% of businesses in this sector had recorded a fall in investment. In the Scottish financial and business services sector, a net 14% of companies reported a rise in investment in the first quarter. And, in tourism, a balance of 22% of businesses raised investment in the first quarter.
Neil Amner of law firm Anderson Strathern, who chairs Scottish Chambers of Commerce’s economic advisory group, said: “The results of SCC’s first quarterly economic indicator of 2018 show that, while the economy has not been without challenges, most sectors are reporting increasing levels of investment across capital and training.”
Mr Amner added: “In terms of wider business concerns and cost pressures, certain areas remain stubbornly challenging, particularly in manufacturing as the cost of raw materials reflects rising global competition.
“Given the limited ability of firms to pass on these costs to customers, this may also be a further reason for rising investment, as businesses look to compete on customer experience and efficiency.”
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