Private sector output gathers pace

Scottish private sector output picked up pace at the end of the second quarter to reach a 46-month high, according to Royal Bank of Scotland (RBS) data published today.

Its seasonally adjusted headline purchasing managers’ index reached 54.5 in June, from 53.7 in May, to show the strongest expansion in Scottish private sector output since August 2014. Both the manufacturing and service sectors saw growth accelerate.

Inflows of new work increased at the fastest pace in almost four years, prompting firms to expand employment to the greatest degree in 52 months and at a rate exceeding that seen across the UK.

Panellists linked the upturn in business activity with better demand conditions, and new business increased “solidly” in June, with the pace of growth quickening to a 47-month high.

However, June’s increase was weaker than the Uk-wide level for the first time since March, and backlogs of work were accumulated for the first time in three-and-a-half years despite the larger headcount across the Scottish private sector.

RBS economist Nicholas Stamenkovic said: “A rising backlog of orders prompted the largest expansion in employment in over four years, clearly outpacing the rest of the UK. Tightening labour market conditions are intensifying price pressures as wages rise further.

“Against this backdrop, companies remain optimistic about the future.”