IT is heartening to see a rebound in Scottish manufacturing output volumes, domestic orders and employment in the Confederation of British Industry’s industrial trends survey. Also encouraging is faster export order growth.

However, the survey is very much a mixed bag.

It flags expectations among Scottish manufacturers that costs will continue to surge. The CBI highlights the part played by sterling weakness in the wake of the June 2016 Brexit vote. The pound’s woes have pushed up import costs.

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Worryingly, the CBI survey shows a significant acceleration in manufacturers’ average domestic and export price increases over the three months to January.

They might have scope to recoup some of their increased costs in export markets, given the pound’s weakness makes them more price-competitive overseas. That said, there will likely be a limit on how much of the cost increases they can recoup.

Meanwhile, domestic price rises, while necessary to stop profit margins being eroded too much, will add to the UK’s inflation woes. In large part, these are households’ inflation woes, given weak nominal pay rises mean real wages are falling again. Annual UK consumer prices index inflation has surged from 0.3 per cent in May 2016, ahead of the Brexit vote, to three per cent.

Probably of most concern in the CBI survey, however, is the weakness of Scottish manufacturers’ investment intentions. Manufacturers are signalling a sharp reduction in investment in plant and machinery, and product and process innovation over the next 12 months. Investment intentions in these two areas are at their weakest since April 2012, in terms of the scale of decline indicated.

Brexit uncertainty is delaying major investment projects across the UK.

The weakness of investment intentions, while not a surprise given this uncertainty and the UK Government’s inability to provide clarity, does not bode well for the future.