Drop in private sector activity for first time in 10 months

Private sector business activity fell for the first time in 10 months during December, according to the latest findings of the Royal Bank of Scotland’s (RBS) purchasing managers’ index (PMI).

Releasing the data today, the bank said the drop coincided with a fresh decline in new sales, while backlogs of work also fell.

The seasonally adjusted RBS PMI dropped to 49.3 last month, from 52.2 in November.

Malcolm Buchanan, chairman of RBS’s Scotland board, said: “Scotland’s private sector finished 2018 as one of only two places across the UK which registered a reduction in business activity during December, contrasting with the modest growth reported for the rest of the country.

“Forward-looking indicators suggest a challenging time ahead, with new sales declining for the first time in 10 months and employment increasing only marginally.

“Competitive pressures, uncertainty arising from Brexit and weak underlying business conditions were all mentioned by panellists as factors hampering performance in December.”

RBS chief economist Sebastian Burnside said: “Scotland’s businesses have shifted from being the most optimistic in the UK a few months ago to amongst the most pessimistic. So much so firms reported a marginal fall in output in December. Exports have struggled and this report shows a steady slowing in the pace of growth amongst Scotland’s international trading partners.”

Sebastian Burnside