Scotland’s private sector remains in expansion

Scotland’s private sector remained in expansion territory in November, according to the latest Royal Bank of Scotland Purchasing Managers’ Index (PMI) from IHS Markit.

The seasonally adjusted headline Royal Bank of Scotland Business Activity Index — a measure of combined manufacturing and service sector output — posted 55.9 in November to signal a ninth successive monthly uplift in output and one that was solid.

“Falling from 56.3 in October, the latest reading pointed to a slight loss of growth momentum, however, with the rate of increase the slowest since April,” said the PMI report.

“Meanwhile, new business rose again, amid reports of strong client demand, in part due to looser COVID-19 restrictions, with the latest uplift sharp despite slowing on the month.

“Surging energy costs, supply delays and rising wage bills placed further pressure on costs during November, however, as input prices rose at the fastest rate on record, while companies raised their own charges to the greatest extent in the series history in response.

“An eighth straight monthly increase in new business at Scottish private sector firms was recorded in November, amid reports of strong demand conditions.

“The rate of expansion eased slightly on the month, but was nonetheless among the quickest on record and sharp.

“At the sector level, services firms reported a much steeper upturn in new work than manufacturers.

“Scottish private sector firms remained optimistic towards activity over the next 12 months in November, with the level of sentiment ticking up to a four-month high.

“Anecdotal evidence attributed confidence to strong client demand and hopes of a continued rebound following the loosening of pandemic-related restrictions.

“November data highlighted a further uplift in workforce numbers at Scottish firms during November, extending the current sequence of increases to eight months.”

Malcolm Buchanan, chair, Scotland Board, Royal Bank of Scotland, said: “The Scottish private sector recorded another strong performance during November, with business activity and new work increasing further. There were some signs that momentum has waned slightly, however, as growth of activity eased to the slowest since April.

“At the same time, supply issues, combined with rising energy, fuel and wage bills added further to firms’ inflationary woes. Input prices rose at a record pace, with firms increasing their charges to the greatest degree on record as a result.

“Price pressures and supply delays remain a key cause for concern, but are still yet to weigh significantly on the performance of the private sector.”