The latest data from Bank of Scotland showed a sharper deterioration in business conditions in Scotland’s private sector in March.
Output declined and staffing levels continued to fall, while the volume of incoming new business fell for the second successive month, driven by the sustained downturn in the oil and gas industry.
The seasonally adjusted headline Bank of Scotland PMI — a single-figure measure of the month-on-month change in combined manufacturing and services output — posted 48.5 in March, down from February’s 49.2.
The drop was led by a sharp contraction in the manufacturing sector, while the decline in business activity at service providers was “more muted.”
Bank of Scotland said the volume of new business received by Scotland’s private sector edged closer to stabilisation during March.
It said a fractional increase in new work in Scotland’s services sector was weighed down by a contraction of new orders at manufacturers.
Companies partly associated the decline with a lack of activity in the oil and gas industry.
Staffing levels in Scotland’s private sector continued to reduce in March, continuing a trend which has been observed in every survey since December last year.
“However, the rate of job shedding remained slight,” said the bank.
Alasdair Gardner, Bank of Scotland’s regional managing director Scotland – commercial banking, said: “Scotland’s private sector experienced harsher business conditions during March, as the current downturn intensified.
“Moreover, the struggles endured in the economy’s oil and gas industry continued to take its toll on output and new order levels, which both contracted.
“As a result, job shedding is evident for the fourth successive month as firms looked to cut back on production costs.”