Manufacturing leading rapid rise in output

Scotland’s private sector output enjoyed the fastest increase in February in 19 months, according to a study by the Bank of Scotland.

Growth was centred on Scottish manufacturers, as firms raised production at the fastest level since January 2014.

New business continued to increase, but at a weaker pace than at the start of the year, while firms worked through their backlogs of work.

February also saw jobs cuts for a second month.

The seasonally adjusted headline Bank of Scotland Purchasing Managers’ Index rose to 51.7 in February, up from 51.2 in January.

Inflationary pressures continued during February. Rising wages, unfavourable exchange rates and higher raw material prices contributed to an increase in input prices.

Higher input costs faced by firms led to the second-quickest rate of output charge increase since April 2011.

Fraser Sime, Bank of Scotland commercial banking’s regional director, said: “The upturn was driven by a strong performance in the manufacturing sector, where production increased at the fastest pace since January 2014.”

Businesses continue to record spare capacity, and he warned the upturn may soften if clients’ appetite for Scottish goods and services decreases further.

Wages and prices are rising.