The latest Royal Bank of Scotland purchasing managers’ index (PMI) report shows that business activity across Scotland’s private sector in March declined at the quickest rate since the survey began in January 1998 as the impact of the coronavirus pandemic hit the Scottish economy hard.
Scottish private sector firms reduced workforce numbers at the sharpest rate in the 22-year history of the PMI report.
“At the sector level, services reported the steepest reduction on record, while the fall in manufacturing production was the sharpest since early-2009,” said the report.
“Driving the fall was a renewed reduction in new business, with the decline in order books also the quickest on record.
“With client demand tumbling, firms’ expectations with regards to activity were the weakest since this series began in 2012.”
The seasonally adjusted headline Royal Bank of Scotland Business Activity Index — a measure of combined manufacturing and service sector output — posted 29.7 in March, dropping from 50.1 in February, signalling a major reduction in private sector output.
The decline was the most marked since data collection began more than 22 years ago.
March survey data signalled a renewed decline in overall new business, with panellists linking the fall to weak client demand amid the COVID-19 pandemic.
“Amid weak demand conditions, Scottish private sector firms reduced workforce numbers during March,” the report added.
“The rate of job shedding was the sharpest in the series 22-year history and outpaced that seen at the UK level.”
Malcolm Buchanan, chair, Scotland board, Royal Bank of Scotland, said: “Business activity in the Scottish private sector declined at the quickest rate in the series more than 22-year history in March, as shockwaves from the COVID-19 pandemic hit the economy.
“Services was more heavily impacted, reporting the most marked reduction on record, although the rate of decline in manufacturing production was the sharpest since early-2009.
“Incoming new business also contracted at a record pace, amid reports that the coronavirus outbreak had led client demand to collapse.
“Moreover, firms’ expectations with regards to output were the weakest since this series began in 2012, with companies anticipating activity to fall further in the coming year from present levels.
“With emergency measures still in place, and demand unlikely to recover in the near future, March data paint a worrying picture for the Scottish private sector.
“The impact of the COVID-19 pandemic is likely to be felt for a while.”