SCOTLAND'S manufacturing sector has reported a slight upturn following a subdued six months, led by a strong performance in exports buoyed by the weakening pound.
Manufacturing orders and output both increased slightly, according to the CBI's latest industrial trends survey.
New orders rose a little over the past three months, ending two quarters of stagnation, with Scottish orders doing better than the ma
nufacturing sector in other parts of the UK.
But experts warned yesterday that the second half of 2008 was likely to result in a return to a flat manufacturing industry.
The average unit cost in manufacturing increased at the fastest rate in three and a half years, boosted by the recent price increases in oil and commodities.
But an increase in prices meant firms were able partly to offset rising commodity costs, pushing domestic price growth to its strongest rate in 17 years. Export prices also increased, to their highest since October 2004.
However, employment in the sector slipped after a year of continuous expansion, according to the survey.
All export sectors reported a good level of growth, except textiles, while in the domestic market, every sector except metals dropped slightly.
David Lonsdale, assistant director of CBI Scotland, said: "I think the weakening pound is definitely a factor in the rise in manufacturing. That, combined with the fact that Scottish companies have made a big push in the last few years to operate globally.
"The fact that firms have already made themselves known to overseas companies means that when the fluctuation in currencies has kicked in, they are already on the scene."
Manufacturing output also recovered slightly, increasing for the first time since the middle of last year.
Iain McMillan, director of CBI Scotland, said: "On many of the key indicators, Scottish industry is reporting a slightly more upbeat position compared to firms elsewhere in the UK.
"The challenge will be to sustain this, and it is heartening to see firms planning to step up their investment intentions over the next 12 months in respect of training and innovation, despite fears over continued rising input costs."
McMillan added that he expected overseas export growth to continue over the second half of the year.
He said: "The data once again reinforces the crucial role that exports play in the health of Scotland's manufacturing industry, with export optimism for the year ahead having perked up.
"This provides a welcome backdrop to the proposed Holyrood parliamentary inquiry into the country's export performance and trade promotion activities, and CBI Scotland looks forward to ensuring that domestic businesses who trade internationally continue to be able access the very best support available."
The full article contains 443 words and appears in The Scotsman newspaper.
