Expectations are high for the Scottish economic recovery to continue into 2014.

The recovery in the Scottish economy, which began in summer 2013, carried through into autumn, according to the latest Business Monitor from Bank of Scotland.

In the three months ending November 2013, 37% of firms surveyed increased turnover, 41% experienced static turnover, and 22% experienced a decrease. This gave a net balance of +15%; a fall from the +23% of the previous quarter but a substantial improvement on the -10% of the same quarter one year ago. This is the second best result in six years and returns the net balance figure to pre-recession levels of 2007.

The overall net balance of turnover for firms in the production sector in the three months to end November this year was +12%. This is down on the +24% of the previous quarter but well up on the +1% of the same quarter one year ago.

Service businesses are showing a similar pattern of improvement in performance. The overall net balance for turnover for the three months ending November was +17%, down on the +22% of the previous quarter but much improved on the -16% of the same quarter one year ago. The pace of growth has eased since summer but remains robust and highest in the service sector.

Volumes of repeat business rose strongly last quarter and remained at high levels in this quarter, with a net balance of +10% – identical to the +10% in the previous quarter and much higher than the -5% of the same quarter one year ago. Trends in the volume of new business have eased with an overall net balance of +13% compared to +20% of the previous quarter and the -1% of the same quarter one year ago. Despite this easing, the level of new business identified in the latest quarter suggests the recovery will be maintained into 2014.

Export activity had plunged at the end of 2011 but a recovery set in at the beginning of 2012. The recovery halted during summer 2012 but deteriorated in autumn that year. The overall net balance for export activity in the latest three months was -14% – a deterioration from the -1% of the previous quarter and the -3% of the same quarter one year ago. This is the most negative trend in this latest Business Monitor.

Firms’ assessment of their immediate prospects in the next six months swung upwards and downwards last year and in the first quarter of this year. The summer results showed an improvement in expectations for turnover which has been maintained in autumn, giving four consecutive quarters of a positive net balance of rising expectations.

Expectations for turnover in the next six months are showing an overall net balance of +16%. This is similar to the +19% of the previous quarter but much improved from the -5% of the same quarter one year ago. Whilst 44% expect turnover to be static in the next six months, over a third (36%) expect turnover to increase against a fifth who expect a decrease. Service firms are slightly more optimistic than production firms, with service firms showing an overall net balance for turnover for the next six months at +17% compared to +14% for production firms.

Despite the poor results for exporting activity for the last three months, expectation for future export activity remain at the second equal highest in nine years. The latest net balance for export activity for the next sixmonths is +21% – a move upwards from the +11% of the previous quarter and the +16% of the same quarter one year ago.

Expectations for the volume of repeat business were slightly down with an overall net balance of +10% for this quarter compared to +12% for the previous quarter, but well up on the -6% of the same quarter one year ago. Expectations for the volume of new business are virtually unchanged from the previous quarter with the latest net balance at +17% – down from the +18% of the previous quarter but significantly up on the -5% of the same quarter one year ago.

These expectation levels suggest the private sector of the Scottish economy will continue to grow in the first half of 2014.

Donald MacRae (pictured), chief economist at Bank of Scotland, said: “The surge in economic activity identified in summer 2013 has been maintained through to autumn with the latest quarter showing the second best result in six years. As a result, the Scottish economy should record a year of growth in 2013. Expectations for 2014 remain high suggesting the recovery will continue into 2014. Consolidation of the recovery would be enhanced by firms increasing investment.”