Scots output increase strongest in four years

Private sector companies in Scotland increased output to the greatest extent in four years during July, according to the July Royal Bank of Scotland PMI (purchasing managers’ index).

The report said business activity was boosted in line with strong inflows of new work.

Demand improved markedly, driving up backlogs and encouraging further job hiring.

Despite more upbeat market conditions, however, business confidence dipped to a seven-month low amid reported concerns regarding the ongoing Brexit process.

“At 55.1 in July, compared to 54.5 in June, the seasonally adjusted headline Royal Bank of Scotland PMI indicated a strong rate of private sector output growth at the start of the third quarter,” said the report.

“In fact, the rate of expansion was the greatest in four years and outpaced the UK average.

“Improved sales spurred business activity higher during the latest survey.

“Matching the trend in output, the influx of new business was the greatest since July 2014 and was quicker than that for the UK overall.

“Panellists attributed stronger demand to new products and contract wins.

“Sector data indicated that the upturn was driven by the dominant service sector, while manufacturers observed a slower rise in order book volumes …

“To cope with current business requirements, firms recruited extra staff during July.

“Although the rate of job creation slipped from June’s 52-month peak, it was faster than the broader UK pace.

“Forecasts of further sales growth reportedly underpinned hiring decisions.”

Malcolm Buchanan, chair, Scotland Board, Royal Bank of Scotland, said: “The upturn in Scotland’s private sector gathered pace at the start of Q3, with output increasing at the strongest rate in four years.

“Business activity was supported by a marked strengthening of demand.

“With backlogs of work rising, this suggests there are sufficient workloads for output to continue rising across the near-term.”