Economic recovery is 'expected to continue'

Image caption, The report points to economic recovery in the private sector

Scotland's economic recovery should continue through the summer, a Bank of Scotland report has suggested.

According to the index of leading indicators low, short-term lending rates should drive growth but this may be hampered by low consumer confidence.

The report found that the private sector is being pressured to raise output because of orders rising throughout the economy.

The data also suggested the recovery should last until the end of the year.

The bank's chief economist, Donald MacRae, said: "The index points to economic recovery in the private sector of the Scottish economy up to the end of August, with a moderation in the rate of improvement in the second half of the year.

"Historically low, short-term interest rates and improving business sentiment will support the recovery but low levels of consumer confidence will act as a drag on growth.

"While the public sector should contribute to the recovery in growth in the Scottish economy this year, pressure on future government spending will limit its contribution in the future."

Spending ability

The volume of new orders received by private companies in Scotland increased for the third month in a row during April.

The index report said: "Recent data suggests that new order levels have picked up, pointing towards a recovery of GDP in the coming quarters."

According to the latest data from the Confederation of British Industry, Scottish firms' "business sentiment" has also improved during the first quarter of 2010.

However, Scottish consumers have remained pessimistic about their ability to spend in 2010.

A report earlier this week showed sales figures were at their worst for a decade.

But despite the low consumer spending and the car scrappage scheme being closed in March, the data showed another sharp year-on-year increase in the number of new cars being registered in Scotland.

In Bank of Scotland data on jobs, recruitment agencies reported that demand for permanent workers in Scotland increased for the fifth month in a row during April, despite rising unemployment.