Growth in the Scottish economy slowed in June as manufacturing output fell, partly due to pressure from the strong pound. A survey by the Bank of Scotland said that the service sector remained the “primary driver” of expansion, as weakness in the oil and gas sector affected demand.

Although the survey showed that the economy grew for the third month running in June, the rate of acceleration slowed to 51.2 — down from 51.9 in May (a figure above 50 indicates expansion).

Chief economist Donald MacRae said: “New export orders showed a fifth consecutive monthly fall, illustrating the challenge of exporting with a strong pound. However, the Scottish economy continues to make a moderate recovery from the slowdown of the first quarter.”

Meanwhile, a survey by CBI Scotland shows that efforts to reduce the economy’s reliance on the service sector are being undermined by a lack of skilled engineering and construction workers. More than half of the firms in the survey are finding it difficult to recruit staff with the necessary science, technology, engineering and maths skills.

The warning came as accountancy group BDO said that business confidence has fallen to its lowest level since November. Its latest Business Trends report says that its Optimism Index for June recorded 103.9 (a figure above 100 indicates growth), “reflecting Scottish firms’ concerns that global financial events could soon affect their own prospects”.

The report also said that global concerns could soon affect employment levels. While hiring intentions remain relatively strong, BDO’s Employment Index saw its sharpest percentage decrease since November 2011.

Martin Gill, head of BDO in Scotland, said: “We thrive by being an outward-looking economy, so to see the dynamo that is the Chinese market slowing down is clearly playing on the minds of exporters.

The Chancellor of the Exchequer missed an opportunity to help exporters — and specifically those manufacturers that drive foreign trade — in the recent Budget. The Government must cut the tax barriers that exporters face as a priority. Introducing a VAT zero rating for suppliers to companies that export would be a good starting point.”