Scottish manufacturing is facing the brightest future in a cautiously optimistic outlook for a range of businesses north of the Border.
Scottish Chambers of Commerce’s (SCC) quarterly economic indicator took the pulse of five of Scotland’s key business sectors – construction, financial and business services, manufacturing, retail and wholesale, and tourism – in the fourth quarter of 2016.
The findings, released in collaboration with Strathclyde University’s Fraser of Allander Institute, showed finely balanced but marginally positive business optimism across all sectors other than financial and business services.
Broadly positive trends in recruitment remained but cash flow was tightening.
The construction sector reported a positive trend in total contracts and sales revenue in Q4, led by growth in private commercial contracts. Employment continued to grow but a dip in investment was expected.
Financial and business services saw marginal growth in sales. The rise in investment slowed, however, and expectations of a growth in employment did not materialise.
Optimism returned to manufacturing with the sector reporting its strongest trend in new orders since the second quarter of 2014. Export orders remained strong but the trend was slower than expected.
Retail also saw a return in optimism as sales growth met expectations. Export and online sales increased but a decline in sales in the first quarter of 2017 is expected. Most retail businesses also expect price rises in 2017.
The tourism sector reported higher optimism that two years ago with a rise in visitor numbers especially from outside the European Union.
Recruitment difficulties remain widespread but expectations in employment and sales are better than a year ago.
Neil Amner, chair of the SCC’s economic advisory group, said: “These economic results show a positive outlook for key sectors in Scottish economy, particularly for manufacturing.”
He believed businesses will be challenged in 2017 by rising prices, tightening cash flow and profitability, the impact of exchange rates on import costs and by business rates.
He continued: “Business focus will be firmly on growth and new market opportunities for 2017, with business keeping a close eye on future trading relationships with the European Union and the rest of the world.
“The balance of optimism is very fine, so the difference between a good year and a bad year could rest upon the slightest of influences.”
