Scotland business

Manufacturing shows 'positive growth trends'

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Manufacturers have reported positive business trends, in the latest survey from the Scottish Chambers of Commerce.

The end of last year saw growth across several sectors of the economy, but there are concerns about rising prices, skill shortages and falling sales.

Manufacturers reported their highest growth in new orders for nearly three years, with export demand still strong.

In retail, there was also a return to optimism - though only just, and despite profitability being squeezed.

In tourism, firms reported improving visitor numbers in the final quarter of the year, but falling sales revenues.

Responses to the survey, carried out for the Chambers of Commerce by Strathclyde University economists at the Fraser of Allander Institute, were more positive than the economic figures published on Wednesday.

The Labour Force Survey and the Gross Domestic Product figures showed weakness in the Scottish economy, while covering an earlier part of 2016 than the Chambers' survey.

While the GDP assessment from the Scottish government has seen a sharp contraction in the past year, the Chambers found a more positive picture, with growth in private commercial contracts.

'Domestic uncertainty'

However, there are warning signals survey, with tourism companies having difficulties in finding skilled recruits. Retail firms flagged up rising prices. Construction is expecting an investment dip.

The weakest of the five sectors covered was finance and business services. More firms in that large part of the economy saw employment fall than saw it rise. But on balance, firms say sales revenue is expected to increase.

Neil Amner, chairman of the Scottish Chambers of Commerce economic advisory group, said: "Our latest economic data shows that many Scottish businesses will have a successful 2017, with business optimism remaining positive for many sectors.

"This is good news for the economy, particularly as we continue to deal with international uncertainty and domestic issues including a rating revaluation and a potential divergence of Income Tax between Scotland and the rest of the UK.

"The overall business mood remains positive but firms expect business growth to be challenged by rising prices, tightening of cash flow and profitability, higher import costs impacted by exchange rates and a likely increase of inflation as the year goes on.

"On the converse side, exporters are continuing to report a healthy growth in trade, though perhaps not quite matching up to their initial expectations.

"Optimism could hardly be more finely balanced and anything that rocks the boat could change the glass from half full to half empty.

"Business success in 2017 will largely depend upon the ability of firms to manage costs and for consumer demand to remain strong in the face of pressures to real incomes."

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