Review of Scottish business surveys [June 2012]

Lockyer, Cliff and Malloy, Eleanor (2012) Review of Scottish business surveys [June 2012]. Fraser of Allander Economic Commentary, 36 (1). pp. 38-42. ISSN 2046-5378

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    Abstract

    Once again the majority of surveys of Scottish business, in common with UK and European surveys, continued to highlight ongoing and deepening concerns as to the sovereign debt crisis in the Euro zone and signs of a more general global slowdown. These, together with forecasts of lower rates of growth in 2012, continuing consumer insecurity and pressures on household spending continued to dampen business confidence and activity. However, the Scottish Engineering Quarterly Review (Q1 and Q2 2012), Oil & Gas UK Index (q1 2012) and Aberdeen & Grampian Chamber of Commerce Oil and Gas Survey (Spring 2012) suggest a contrasting view for these sectors, and one of rising orders, activity and confidence – although export orders continue to remain weak in Scottish Engineering in marked contrast to this sense of a slowing down. Additionally, Visit Scotland occupancy data shows fewer signs of a slowdown, although Scottish Chamber data suggests occupancy rates may well be sustained by more room rate reductions, and widespread discounting continues in retail as the latest Scottish Retail Consortium figures for May indicate continuing weak sales trends. PMI and Scottish Chamber data suggest a modest improvement in activity in the first quarter, but the monthly PMI surveys (both UK and Scotland) for April and May suggest a slowing down in activity, the extent to which this reflects seasonal and other differences between the first half of 2011 and 2012 is unclear, equally unclear is the outcome of the current financial issues in the Euro zone, reported elsewhere in this Commentary. The impact of government spending cuts and reorganisation of public services continue to adversely influence consumer behaviour, and business activity and sentiment in Scotland and in the rest of the United Kingdom. Within Scotland there is the additional uncertainty over the referendum and calls from a number of companies for an informed debate on the key questions.