RBS: Scottish private sector output rises for first time since August

Business activity across Scotland’s private sector increased for the first time since August in November, according to the latest Royal Bank of Scotland PMI.

RBS: Scottish private sector output rises for first time since August

Malcolm Buchanan, chair, Scotland board, Royal Bank of Scotland,

The index has highlighted that key to the renewed growth was a marginal uptick in order book volumes, the first for five months, alongside the fastest rise in workforce numbers since April.

The seasonally adjusted headline Royal Bank of Scotland Business Activity Index - a measure of combined manufacturing and service sector output - posted 50.9 in November, up from 49.6 in October, to signal the first increase in private sector output since August.



Anecdotal evidence linked the rise, which was mild overall, to stronger demand conditions. By sector, services reported the fastest expansion in the current six-month sequence of growth. Meanwhile, manufacturers noted a sharp, albeit softer, fall in output in November.

Overall demand conditions rebounded in November, with incoming new business rising following three successive monthly falls. The overall rise in Scotland was the second-fastest of the 12 monitored UK areas, behind only London. That said, the increase was subdued in the context of the series history, with some respondents noting that continued uncertainty had weighed on growth.

By sector, service-providing firms reported a moderate uptick in new business, while order book volumes fell for the fifteenth consecutive month at Scottish manufacturers.

Scottish private sector firms reported an increase in staffing levels in November, thereby ending a four-month sequence of decline. The rate of job creation was modest overall, albeit slightly elevated in the context of the series historical data.

Concurrently, the level of outstanding business at Scottish private sector firms was unchanged during November, following 13 months of consecutive decline.

As has been the case in every month since February 2016, cost burdens faced by Scottish private sector firms rose in November. Panellists linked the increase, which was sharp overall, to higher prices at suppliers and unfavourable exchange rates. That said, the rate of input price inflation softened and was the slowest for over three years.

In line with the trend for input costs, average prices charged by private sector firms across Scotland rose in November. The rate of charge inflation eased and was broadly in line with the series historical average.

Finally, November data indicated improved business confidence towards activity over the next 12 months. The level of positive sentiment strengthened from October to the highest since July, although remained subdued in the context of historical data.

Malcolm Buchanan, chair, Scotland board, Royal Bank of Scotland, said: “November survey data highlighted some positive signs for the Scottish private sector. Output rose for the first time since August with quicker services growth outweighing the manufacturing downturn. Meanwhile, new business increased for the first time in four months, with the rate of expansion in Scotland second only to London across the UK.

“Nevertheless, uncertainty continued to subdue demand, with client hesitancy reportedly weighing heavily on both output and activity. A clearer outlook is required to boost demand and for the Scottish private sector to gain further momentum in the closing stages of the year.”

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