The Scotsman

Scots private firms optimistic despite output slowdown

● RBS’S headline PMI slides to 52.2 from 53.4 in slowest growth seen since March

- By EMMA NEWLANDS emma.newlands@jpimedia.co.uk

Scottish output growth momentum slowed last month although confidence towards future activity levels gained pace, according to data published today by Royal Bank of Scotland.

The Gogarburn-based lender’s seasonally adjusted headline purchasing managers’ index decreased to 52.2 in November. This was down from 53.4 in October and signalled the slowest expansion in private sector output since March, although growth was stronger than that for the UK as a whole.

Total new orders received by Scottish private sector firms increased, reflecting an upturn in the service sector, as manufactur­ers registered a reduction in sales.

New contract wins supported growth in the former, while weak underlying demand conditions affected workloads at the latter. That said, the overall expansion was only modereased. ate and weaker than in October. The lender also flagged a further decline in outstandin­g business at privately-run firms in Scotland, with the rate of depletion “marked and the sharpest in just over two years”. Weaker growth in sales enabled unfinished orders to be cleared.

Nonetheles­s, job creation was maintained during the month. And despite employment growth weakening since October and being slight overall, it was stronger than the long-run average.

Pressures on margins remained, with a sharp rise in input costs, but firms were more confident towards future growth prospects than in October.

Planned company growth, new marketing strategies and stronger internatio­nal competitiv­eness were all mentioned as reasons reinforcin­g confidence.

Malcolm Buchanan, chair of the Scotland board at RBS, said: “In line with the slowdown seen for the UK as a whole in November, Scotland’s growth momentum also Dragging the Scottish economy was broad-based weakness across both manufactur­ing and service sectors.”

He added: “Indeed, shortterm growth prospects seem meagre. Order books expanded at a weaker pace, firms hired extra staff less aggressive­ly and capacities remain underutili­sed, as evidenced by a stronger fall in backlogs.

“Nonetheles­s, confidence towards future activity levels improved. Despite the current Brexit upheaval, some companies are anticipati­ng expansions and internatio­nal competitiv­eness improvemen­ts over the coming year.”

Meanwhile, a report from BDO also published today has flagged a fall in business output last month across the UK.

The accountant and business adviser said the economy is set to “stagger” to the end of 2018 after output in November fell to its lowest level since July, to 97.69 from 97.72 in October.

Business confidence slumped for a fourth consecutiv­e quarter to its lowest level since January 2017 to 100.33 compared with 101.25 last month, the business trends report also found.

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