Scottish economy returns to growth

SCOTLAND’S private sector economy recorded growth in March, with a “solid” upturn in output which marked its first expansion since September, a key survey reveals.

However, Scottish companies last month had to endure the sharpest rise in input costs since August 2018, “amid reports of supplier shortages as well as additional Brexit and Covid-19-related costs”, according to the survey published today by Royal Bank of Scotland.

Consequently, Scottish companies raised their prices at the fastest pace for two years.

The Scottish business activity index, which measures combined manufacturing and services sector output, rose to 54.3 in March from 44.1 in February on a seasonally adjusted basis, comfortably above the level of 50 deemed to separate expansion from contraction. And Scottish businesses’ confidence about the prospects for increased activity on a 12-month horizon surged, amid hopes of a swift economic recovery.

Inflows of new work to Scottish companies were overall broadly stable in March, after declining for six consecutive months.

The survey showed a further overall decrease in employment in Scotland’s private sector economy in March, although the latest fall was only slight.

Royal Bank said: “Panellists attributed the latest fall mainly to the non-replacement of voluntary leavers due to the pandemic, although there were some mentions of lay-offs and redundancies. That said, the rate of job-shedding was the slowest since February last year and only fractional overall.”

Services firms continued to shed staff in March, but the rise in goods producers’ overall employment accelerated.

Commenting on the picture across the UK nations and regions, Royal Bank chief economist Sebastian Burnside said: “English regions generally continued to outperform, with the East of England, West Midlands, and Yorkshire and Humber the pick of the bunch, while encouraging signs for activity across Scotland and Wales were somewhat tempered by further job losses across both nations.”