However, manufacturing output is predicted to grow in line with the overall economy for the first time since 2013, as weaker sterling and a pick-up in global demand ultimately provide a boost to exports. Image copyright PA Image caption Many Scottish infrastructure projects, including the Queensferry Crossing, are nearing completion He added: Consumer spending, which last year proved surprisingly resilient and helped buoy the economy, is fading. A weak labour market and rising inflation is putting further pressure on incomes and recent research reveals that households expect worsening economic conditions. All of this means consumers are likely to be more cautious. 'Clear message' EY's chief economist for UK and Ireland, Mark Gregory, said: Scotland's economy is showing signs of slowing faster than the rest of the UK which sends a clear message that business and government will have to work harder and smarter to achieve sustained growth. The economy has to rebalance and shift away from a reliance on public-funded major infrastructure projects. Sector diversification is also required to help move away from an over-reliance on the oil and gas, construction and financial services sectors. He added: Stimulating business investment in Scotland both in terms of physical assets and skills could deliver extensive, long-term economic benefits. This presents an opportunity for public and private sectors to define a new way of working together in order to drive further economic growth. Business investment is imperative to the long-term health and growth of the Scottish economy but is currently subdued. Government can help de-risk investment by supporting the development of skills and infrastructure that businesses need so that companies can feel confident they can maximise their investment. Labour market 'improving' Meanwhile, a separate report has suggested improving labour market conditions in Scotland. The latest IHS Market Report on Jobs for Scotland found that last month there were sharp rises in worker placements, record growth in permanent staff demand and falling availability. In terms of staff demand, the data signalled the fastest rate of expansion in the survey's 14-year history, with growth faster in Scotland than across the UK as a whole. Scottish recruitment consultancies also recorded further steep growth in demand for temporary staff. Sector data indicated that staff demand rose fastest in the IT and Computing sector for both permanent and temporary roles. Meanwhile, the rate of expansion in permanent staff placements in Scotland reached its highest in 27 months as growth matched the UK as a whole, which was at a 25-month high. Read more: http://www.bbc.com/news/uk The post EY report: Scottish economy 'stuck in slow lane' BBC News appeared first on Business Questions Information Answers.