The broad-based growth in output from the services sector propelled Scotland to an impressive business activity index of 55.2 in May, marking the strongest increase in two years.
This surge in services masked a corresponding decline in manufacturing, which saw new orders fall rapidly. The continued rise in services is attributed to better marketing strategies, new client wins, and increased customer activity.
However, despite new work reaching a three-month high, firms in Scotland remained the least optimistic for the second consecutive month.
While these figures suggest a continued economic recovery, the lived experiences of workers indicate that the cost-of-living crisis continues to impact quality of life and spending habits. Six in ten people report that their living standards have not improved in 2024, with nearly four in ten saying they have worsened.
The impacts on spending habits are clear: 42% of people say they have had to cut back on essentials like food and utilities, a figure that rises to 47% for women. Regarding non-essentials such as eating out or entertainment, 60% report reducing their spending.
The cost-of-living crisis is also affecting some people's ability to pay household bills, with 19% saying they have fallen behind, a figure that rises to 28% for those aged 18-24. Additionally, over a quarter (27%) have taken out debts (loans, credit) to cover unexpected bills this year, with this figure rising to 37% for those aged 25-49.
While the labour market performance is mixed across the UK, job creation in Scotland looked positive last month. Across the UK, 21% of firms plan to freeze recruitment or even reduce it this year, with rising costs and worsening revenues topping the list of reasons.
One metric to watch is the impact of digital technology and automation on job numbers. Commentators suggest that the adoption of these technologies, including AI, could lead to job losses in the near future, though currently only 13% of managers cite these as factors in reduced hiring.
Surveys asking jobseekers about the difficulty of finding a job in the UK have shown an increase over the last two years. Currently, 30% of job seekers say it is fairly difficult to find a job, compared to 22% two years ago.
This figure is now back to where it was just before the Covid-19 pandemic. The number of advertised vacancies in the UK continues to fall, suggesting one reason for this uptick in difficulties securing employment.
Between March and May 2024, there were 904,000 vacancies advertised across the UK, a small decrease of 12,000 from the previous quarter but the 23rd consecutive period of decline. Among industry sectors, there is a mixed picture, with a 50/50 split between those with reduced vacancies and those with increased vacancies.
At the same time, there has been a gradual rise in unemployment numbers to 4.7% in Scotland, the highest of the UK nations, marking a year-on-year increase of 1.4%. This rise in unemployment, coupled with declining vacancies, has pushed up the number of unemployed people per vacancy to 1.7, up from 1.5 in the previous quarter, contributing to the increased difficulty facing jobseekers.
John Walls is head of data analysis at s1jobs.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here