Return to growth signalled as BoS PMI rises to 14-month high

Scotland’s private sector output increased for the first time in three months during September, according to the latest Bank of Scotland Purchasing Managers’ Index (PMI)

The rate of expansion was the fastest for 14 months, as firms also recorded higher levels of new business and employment.

The Edinburgh-based bank’s PMI, compiled by IHS Markit and based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 600 private manufacturing and service sector companies, rose to a 14-month high of 51.2 in September, up from 49.1 in August.

The latest figure ended a two-month period of contraction, as both manufacturers and service providers reported higher business activity.

Volumes of new business in Scotland’s private sector rose for the first time since June.

Meanwhile, jobs growth continued during September, albeit at a slower pace. A number of panellists linked the rise in headcounts to efforts to support the expansion in output.

On the price front, firms raised their selling prices at a slower pace despite facing the fastest increase in input costs for 33 months.

Nick Laird, Regional Managing Director, Bank of Scotland Commercial Banking, said: “An upturn in Scotland’s private sector was signalled in September, as the headline index rose to a 14-month high. The improvement in the economy was equally shared between service providers and manufacturers, who both registered modest increases in output during the month. Demand for Scottish goods and services also rose, highlighted by a rise in new business. On another note, firms faced the fastest increase in input costs for 33 months, putting pressures on firms’ margins as we approach the end of the year.”

UK Government Minister Andrew Dunlop said: “This is good news for Scotland. Behind the numbers, this means new jobs and opportunities for hardworking families across Scotland.

“But with the UK as a whole performing more strongly than Scotland, the Scottish Government urgently needs to stop looking for problems and start talking Scotland up and focusing on how best to use their new powers to support the Scottish economy.

“These numbers show there are real opportunities for Scotland’s economy that must not be wasted, and the UK Government is ready to work with them to unlock those opportunities – that’s what people in Scotland expect of us.”