Business ‘worried’ about rising inflation

Business activity improved for the fourteenth consecutive month in April, but leaders are concerned about rising inflation, according to the latest figures from the Royal Bank of Scotland (RBS).

The monthly purchasing managers index (PMI) for April showed that the RBS business activity index rose to 58.9 – up from 58.4 in March.

Positive indicators were supported by a strong upturn in manufacturing production, with an expansion in services activity recorded again.

Scotland’s private sector noted a rise in new business during April, with client demand rising with the reduction in Covid restrictions.

Business leaders also have strong optimism, with respondents reporting they felt positive about expectations over the next year with hopes of an economic recovery.

However, optimism is still at an 18-month low and is below the UK-wide average as firms grow concerned about rising inflation.

Firms took on more workers during April, but the pace of job creation has eased to the joint-softest in the last year.

Businesses are building capacity to cope with the current and anticipated future demand.

Employment growth in Scotland was, however, firmly below the UK average.

Companies reported additional cost burdens in April due to higher labour costs, fuel, food and energy prices.

Malcolm Buchanan, chairman of the Scotland board at RBS, said: “Inflationary pressures continued to build and were further aggravated by ongoing supply chain issues.

“Nevertheless, many firms were hopeful of activity growing in the coming 12 months.”