Recovery signs continue to grow

Barely had last week’s Scot-Buzz with its lead story on reasons not to fear a triple dip whizzed into email boxes throughout the land than further evidence has mounted that the economy has a pulse after all.

The latest is the Bank of Scotland Purchasing Managers Index out yesterday which showed the sharpest rise in private sector activity in January for seven months.

January’s PMI report showed that growth of Scottish private sector activity gained momentum at the start of 2013, with both output and new work increasing at faster rates than in December. Improved business conditions and added pressure on operating capacity led firms to create extra jobs over the month.

The PMI rise to 52.3, up from 51.2 in December, signalling a moderate and accelerated expansion of private sector business activity north of the border. Growth remained centred on the services sector, with a further (albeit slightly slower) decrease in goods production recorded. This latest expansion of Scotland’s private sector economy was broadly in line with the rate of growth seen at the UK level.

Much of the improved trend in business activity in Scotland reflected an accelerated increase in new work placed with firms during January. Intakes of new business rose for the second month running and at the fastest pace since March 2012. A rise in demand within the domestic market was the principal factor behind the increase in intakes of new work, with a slight drop in new export orders recorded at manufacturers.

Firms continued to add to their payroll numbers during January, raising employment levels for the seventh time in the past eight months, though the overall rate of net job creation was nonetheless still modest and slower than the UK average.

Other pointers out in the past few days include:

Construction output across the UK rose 0.9 per cent quarter-on-quarter in the fourth quarter of last year.

Industrial production rebounded markedly in December, primarily due to a marked jump of 1.6% in manufacturing output after a pretty torrid time since August.  In addition, oil and gas extraction continued to pick up in December following the major hit to activity that had come in September and October from extended maintenance and repair work at the largest North Sea oil field.

The Society of Motor Manufacturers reported a healthy rise of 11.5 per cent year-on-year in car sales in January. This indicates that car sales got off to a decent start to 2013 after a surprisingly resilient 2012. Car sales rose 5.3% overall in 2012 compared with only flat GDP. There was also a gain of 6.0% year-on-year in January for fleet sales.

The services sector purchasing managers' survey for January shows a return to growth and the risk of a triple dip recession appears to have receded. And the composite  index measuring overall output in the services, manufacturing and construction sectors climbed to a five-month high of 52.0 in January from 49.9 in December.

The British Retail Consortium retail sales monitor pointed to surprisingly robust retail sales in January. Total retail sales values were up by 3.0 per cent year-on-year in January, up from disappointing gains of 1.5% y/y in December and 1.6% y/y in November.