Businesses continue to expect growth amid output slowdown
Scotland is following a UK trend with a slow down in orders over the next three months
Scottish businesses remain optimistic despite output falling to a four-year low in a monthly report.
The latest business trends report by accountants and business advisers BDO LLP found Scotland is following a UK trend with a slow down in orders over the next three months.
However, a slight strengthening of the pound following the announcement of the General Election and a steadying of the growth in inflation has increased business optimism, the report found.
BDO's output index, which indicates how businesses expect their order books to develop over the next three months, fell to 95.6 in April from 95.9 in March, the lowest level in four years.
The report said the figure is now well below the long-term growth trend of 100 and just above the point of contraction - below 95.0.
However, the manufacturing optimism index rose from 110.6 in March to 112.2 in April and is now at its highest since January 2015.
Martin Gill, head of BDO in Scotland, said: "There appears to be growing disconnect between what businesses are experiencing now and how they expect their order books to develop in the coming six months.
"We haven't seen anything quite like this since 2009. Then, businesses were so used to continuous economic growth that they couldn't quite believe it when the good times didn't immediately return. Something similar seems to be happening at the moment.
"Current output levels are very close to a zero-growth level, yet business people in Scotland and the UK are strongly optimistic. This would suggest that we could be in line for a significant growth surge in early 2018.
"Optimism is often a good precursor for growth, as confident hiring and investment decisions are the key determinants of economic success.
"Businesses seem to be excited and upbeat about a post Brexit 'global Britain'. This is despite their current experience of very subdued economic conditions.
"Nevertheless, realism suggests that current optimism levels are probably pretty fragile. The Government should not be afraid to do whatever it can to support growth if and when it is required.''