SCOTLAND’S engineering sector has seen sharp slowdowns in growth of output and employment in the latest three months but has nevertheless recorded a sixth consecutive quarter of expansion amid the “political mayhem” around Brexit.
This resilient performance, in the face of the economic headwinds generated by political uncertainty, is revealed today in the latest quarterly review from industry body Scottish Engineering.
Analysis: One thing is for sure in these uncertain times
Touching on the Brexit negotiations between the UK and European Union, outgoing Scottish Engineering chief executive Bryan Buchan writes in the quarterly review: “Our American cousins have an expression which is not suitable for this august journal, but which perfectly encapsulates the political mayhem currently being played out.”
Scottish Engineering declares: “While political uncertainty rages across the UK and the rest of Europe, Scotland’s engineering industry forges on with orders and output levels holding up well.”
Its survey of 320 companies shows order intake, output volumes and staffing in the sector all grew for a sixth straight quarter during the latest three months. And engineering export orders grew for a fifth consecutive quarter, against the backdrop of a post-Brexit vote weak sterling.
Ian McConnell: Talk of Brexit ‘betrayal’ is cause for fear among firms
However, subtracting the proportion reporting a fall from that recording a rise, only a net 10 per cent of Scottish engineering companies achieved an increase in output volumes in the latest three months. This marks a sharp slowdown from the preceding three months, when a balance of 25% of companies in the sector reported a rise in output volumes.
Only a net 2% of engineering companies north of the Border recorded a rise in staffing in the latest three months. In the previous quarterly survey, a net 17% had reported an increase in employee numbers.
A balance of 17% of Scottish engineering companies reported an increase in order intake over the latest three months. Although this continued to point to a robust rate of growth, a net 26% had recorded a rise in the previous quarterly survey.
And, while survey respondents serving the oil and gas industry signalled strong growth in order intake, large engineering companies overall reported a fall in incoming new business in the latest three months.
The pace of export order growth held up in the latest three months, with the survey showing a net 28% of Scottish engineering companies achieved an increase in the latest three months. This matched the balance reporting such a rise in the previous quarterly survey.
Mr Buchan, who declares it has been a “privilege” to represent member companies of Scottish Engineering over the last five-and-a-half years, said: “Our sector…continues to perform well, albeit with a slight weakening over the previous quarter, but optimism remains strong amongst our pragmatic Scottish business leaders.
“The key metrics of export order intake and indeed sales margins are very positive, and training investment has crucially held up for our sector.”
Referring to recent changes in Scottish income tax rates and thresholds, Mr Buchan said: “The Scottish Budget has been approved and industry views with concern the adverse income tax differential [with the rest of the UK] which this brings. It is to be hoped that this is not the thin end of a much thicker wedge.”
Analysis: One thing is for sure in these uncertain times
Reflecting on his time at the helm of Scottish Engineering, he said: “We have endured a protracted period of uncertainty, which has included the Scottish independence referendum, the global collapse in oil prices, the election of ‘The Donald’ and currently the seemingly interminable machinations of Brexit.”
A separate survey published yesterday by the Chartered Institute of Procurement & Supply shows growth of broad UK manufacturing activity slowed slightly in February to its weakest pace in eight months.
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