Scotland business

Survey suggests 'inconsistent picture' in Scots economy

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Image caption Nearly half of manufacturing firms who responded to the survey reported a decline in orders in the first quarter of this year

Business performance is "inconsistent" across the Scottish economy, according to a respected quarterly survey.

Scottish Chambers of Commerce (SCC) found the construction and retail and wholesale sectors had "a relatively successful" first three months of the year.

But nearly half of manufacturing firms reported a decline in orders.

And about 45% of firms in financial and business services said profits declined over the quarter.

SCC's latest quarterly economic indicator also suggested that the tourism sector enjoyed strong sales, but companies were less confident about future performance and profit margins.

Construction firms indicated a growth in profitability, with 50% of all respondents reporting that overall sales revenue had increased over the quarter.

More building companies said they anticipated growth to continue in terms of sales revenue, employment and investment over the next three months.

But they reported that skills shortages remained a challenge for the sector.

'Online boost'

Firms in retail and wholesale reported growth in sales and investment, with an increase in online sales boosting optimism.

About 45% of businesses in the sector said they expected growth in sales to continue in the current quarter.

A similar percentage of manufacturers experienced a decline in orders following a strong quarter at the end of 2015.

However, the majority of respondents expected orders to increase or remain at the same level over the next three months.

Nearly half of all financial and business services firms who took part in the survey said profits over the quarter declined.

But SCC noted "a clear distinction between the performance of oil and gas sector businesses, which are continuing to report weak performance and non-oil and gas businesses which are reporting positive trends".

'Knife edge'

SCC chief executive Liz Cameron said: "This detailed picture of the Scottish economy after the first three months of 2016 shows that business performance is inconsistent across a range of sectors.

"As Scotland prepares to head to the polls for next month's Scottish Parliamentary elections, we know that our economy is on a knife edge between growth and recession and that the prospects for the future are unclear.

"In these circumstances, it is imperative that our new Scottish government puts the economy at the centre of its plan for government over the next five years, systematically addressing those factors under the Scottish Parliament's control that could be used to make Scotland the most competitive place in the UK to do business."

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