Manufacturers in Scotland are cautiously optimistic about business prospects in the coming months following a sluggish period for orders and output in the second half of 2023.
Scottish Engineering chief executive Paul Sheerin said the industry group's latest quarterly survey of the sector reveals some "encouraging signs" as order intake swung back into positive territory at the start of 2024. However, inflation remains a concern even though it is beginning to stabilise as the impact on wage and energy costs continues to weigh.
“This first survey of 2024 shows encouraging signs that Scotland's manufacturing sector is recovering from the softer market demand we saw in the back half of last year," Mr Sheerin said. "Aerospace, defence and energy in particular are busy and in some cases stretched, and the gains forecast elsewhere we hope to see turn to a reality and a stronger take up of capacity more evenly distributed."
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He added: "A little confidence boost from a recovering interest rate as inflation continues to stabilise could go a long way to help boost that."
Order intake improved by 12 percentage points to a balance of +8% from -4% last quarter, with exports once again leading the way. Output volume softened from a previous balance of +9% but remained in positive territory at +4%.
UK orders improved from last quarter with a shift from -10% to +1%. Within this, small firms employing less than 100 people reported a third consecutive quarter of negative returns while medium-sized companies chalked up the biggest gains. Large companies, defined as those employing more than 500 people, remained in positive territory but fell to +25% from +50% previously.
Export orders improved for a second consecutive quarter with a movement from +1% to +6% across all sectors and sizes of businesses, led a hefty positive swing among medium-sized companies from -15% to +21%. Larger companies reported a decline from +100% to -50% and small companies remained static, showing equal positive and negative returns.
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Optimism was positive overall at +19% for all companies and sectors, improving by +15% on last quarter. All sizes of companies remained positive for a second consecutive quarter: small (+14%), medium (+30%), and large (+50%).
Looking at individual sectors, plant and machinery, electrical and electronics, and precision engineering firms were the most optimistic at +42%, +33%, and +10% respectively. Manufacturing, metal products and fabricators were flat showing equal positive and negative returns but fabricators improved from -42% last quarter to 0% this quarter, and metal products followed this direction moving from -50% to 0%.
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