Scottish private sector sees slight output growth in April

Scotland’s private sector made a positive start to the second quarter, according to April’s Bank of Scotland Regional Purchasing Managers’ Index (PMI), which showed growth pick up slightly from the relative stagnation experienced in the previous month’s survey.

The slight upturn was driven by the manufacturing sector, which offset shrinking services output. On the price front, input cost inflation accelerated and was steep overall, leading to a marked rise in charges. Job creation was at an eight-month high despite business confidence easing to its lowest in six months.

The seasonally adjusted headline Bank of Scotland PMI rose to 50.6, from March’s four-month low of 50.1. The rate of growth signalled remained below the historical series average since January 1998.

Price pressures remained sharp in April. Furthermore, input price inflation was higher than the UK average for the first time in four months. Panellists noted rising raw material cost and wage pressures as key factors. According to anecdotal evidence, companies then passed on part of the burden of increased costs to customers, as corroborated by a marked rise in output charges in April.

Finally, confidence towards future growth prospects remained positive in April. That said, expectations eased since March, which firms attributed to political and economic uncertainty in Scotland.

Fraser Sime, regional director, Bank of Scotland Commercial Banking, said: “April’s PMI signalled a tentative upturn in Scottish private sector growth, with both output and employment increasing at faster rates. The latest survey’s results were driven by a strong manufacturing sector, which moved up a gear in April. There was good news all round from steep production growth, to solid job creation and a further easing of cost pressures.

“Meanwhile, the service sector marred April’s PMI score as business activity in the sector shrunk for the second month running. A faster rise in new orders bodes well, though continued growth in the second quarter remains heavily dependent on the relatively stronger manufacturing sector.”