The Scottish private sector “sunk deeper into a downturn” during the opening month of 2021 as lockdown measures stifled client demand and led some businesses to close temporarily, according to the latest Royal Bank of Scotland Purchasing Managers’ Index (PMI.)
The seasonally adjusted headline Royal Bank of Scotland Business Activity Index — a measure of combined manufacturing and service sector output — posted 33.3 in January, down from 47.3 in December, to signal a rapid drop in private sector output.
Moreover, excluding the March to May period of last year, the latest reading was the lowest on record (since 1998).
“New work fell at a similarly sharp pace, with the decline also the most marked for eight months,” said the report.
“As a result, companies made further cuts to staff numbers.
“Despite the challenging conditions, sentiment improved during January, with business confidence the highest since early-2014 on the back of the ongoing vaccine rollout, as well as hopes of looser restrictions and a timely economic recovery.”
Malcolm Buchanan, Chair, Scotland Board, Royal Bank of Scotland, said: “Stricter lockdown measures took a toll on the Scottish private sector during January, with the downturn worsening amid steep drops in both activity and new business.
“The falls remained slower than at the height of the first lockdown last spring, perhaps reflective of companies adapting to restrictions, but were still severe.
“Positive news again came from business confidence, which was the strongest since April 2014 amid hopes of an economic recovery once restrictions are lifted.
“Conditions will remain very challenging in the meantime, but there is a light at the end of the tunnel for Scotland’s economy as the vaccine rollout progresses and measures are loosened.”