WiredGov Newswire (news from other organisations)
Scottish manufacturing output and orders fall at record pace
According to the latest quarterly Scotland Industrial Trends Survey, new orders in the manufacturing sector fell at a record pace in the three months to July (since April 1975). Export orders fell steeply, and domestic orders dropped at the quickest pace on record.
But looking ahead, manufacturers expect total orders to pick up in the next quarter. A return to growth in domestic orders is expected, while export orders are anticipated to fall only slightly.
Output volumes also fell at a survey record pace in the quarter to July, although firms expect output to grow slightly in the next three months. Headcounts fell at the fastest pace since April 1999, but manufacturers expect the pace of decline to slow in the next three months.
Business sentiment in the three months to July improved slightly, following a survey-record pace of decline in the three months to April. Export sentiment continued to deteriorate, but at a much slower pace than in the previous survey (which saw the fastest decline in export sentiment since July 1980).
Manufacturers expect investment in buildings and plant & machinery to decline in next year, but to a lesser extent than last quarter. Furthermore, firms plan to raise capital expenditure on product & process innovation and training & retraining in the next year. The shares of manufacturers citing uncertainty about demand and internal finance shortages as the factors likely to limit investment rose to record highs –further illustrating the deep impact of Covid-19 on the economic outlook.
Tracy Black, CBI Scotland Director, said:
“With record falls in total orders and output volumes, the quarterly data makes for hard reading for the Scottish manufacturing sector. Covid-19 has undoubtedly taken its toll, and, while there are some small signs of optimism ahead, too many companies and jobs are far from out of the woods.
“Real collaboration between government and industry is needed to implement an ambitious economic recovery plan that prioritises jobs – especially for young people – and investment. The focus now needs to be on delivering an effective Scottish jobs guarantee scheme that helps firms create opportunities for young people, while also supporting their existing workforce.”
- Output volumes in the quarter to July fell at their fastest rate on survey record (-71). Firms expect output to grow slightly in the next quarter (+6)
- Total new orders in the three months to July declined at their fastest pace on record (-77). Domestic orders fell at a record rate (-77), while export orders dropped sharply (-47).
- Manufacturers expect total orders to pick up next quarter (+22). Domestic orders are anticipated to begin to recover (+14), while export orders are expected to fall at a considerably slower pace (-5).
- Headcounts in the quarter to July (-53) fell at their fastest pace since April 1999. Numbers employed are expected to decline at a slower pace next quarter (-20).
- Average costs in the quarter to July (+45) grew at their fastest pace since April 2013, while average domestic prices (-21) fell at the quickest pace since April 2016. Cost growth is expected to slow next quarter (+20), while the fall in domestic prices is also anticipated to slow (-14).
- Stocks of raw materials (-60) and work in progress (-66) fell at their fastest respective rates on record. Stocks of raw materials are expected to recover slightly (+4) next quarter, while stocks of work in progress are expected to decline at a slower pace (-20).
- Business sentiment in the quarter to July improved slightly (+5), following a survey-record pace of decline last quarter (-96).
- Firms expect investment in buildings (-32) and plant & machinery (-10) to decline in the next year, but to a lesser extent than in last quarter. Manufacturers anticipate capital expenditure in product & process innovation (+31) and training & retraining (+30) to grow next year.
- A record high share of firms cited uncertainty about demand (84%) and internal finance shortages (49%) as factors to limit investment in the next year, likely reflecting the impact of the COVID-19 crisis.
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