Scots private sector contracts but payrolls rise again


The Scottish private sector reported a deepening contraction in private sector output during November, according to the latest Royal Bank of Scotland Purchasing Managers’ Index (PMI) data.

However, payroll numbers across Scotland’s private sector firms increased in November, extending the run of job growth to 20 months.

The pace of job creation quickened slightly from October amid renewed growth in employment across the manufacturing sector.

All of the 12 monitored UK regions reported a decline in inflows of new business, with Scotland registering the third-fastest downturn behind Northern Ireland and the East Midlands.

Business confidence in Scotland weakened from October’s three-month high, posting well below the historical average.

While there were hopes of growth in sales in the coming year, the ongoing downturn in activity weighed on sentiment.

“The Business Activity Index ticked down from 45.8 in October to 43.9 in November, signalling that fastest decrease in the current series of reduction that began in August,” said the PMI report.

“Hesitancy among clients amid economic uncertainty, the cost of living crisis and higher borrowing costs, stifled demand.

“Consequently, inflows of incoming new business continued to decline in November.

“Moreover, the pace of reduction steepened in November and extended the current run of contraction to five months.

“Looking ahead, expectations regarding the 12-month activity outlook across Scotland weakened from October’s three-month high and was subdued in the context of historical data.

“New business placed across Scotland’s private sector decreased sharply in November.

“The downturn quickened from the preceding survey period to the fastest overall in the current five-month run of contraction.

“An array of reasons were linked to the latest reduction in sales, including lower market activity, the cost of living crises, rising borrowing costs, and growing economic uncertainty resulting to delayed-decision making.”

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, said: “The latest survey data signalled a stronger contraction across the Scottish private sector during November, as demand waned amid market uncertainty and the cost of living crisis.

“As a result, both activity and incoming new business fell as sharpest rates in the current four- and five-month sequences of reductions.

“Adding further strain on the sector was the continued intensification of price pressures.

“After cooling over the summer, input price inflation again accelerated in the fourth and final quarter of the year.

“Additionally, rates charged by private sector firms also increased at a quicker rate during November as firms tried to recoup costs.

“Overall, the penultimate month of the year pointed to confidence among private sector firms registering less upbeat than that seen in October, as economic challenges and feeble demand weighed on exceptions.”