Scots private sector expands for fourth straight month

Scottish private sector firms registered an expansion in new business for the fourth consecutive month in May, according to the latest Royal Bank of Scotland Purchasing Managers Index (PMI).

“The rate of growth was close to that seen in April,” said the report.

“Where an increase was reported, respondents linked this to new clients wins and the commencement of new projects.

“However, sector data indicated a growing divergence as quicker growth in new business at service firms helped offset a faster downturn at goods producers.”

Staffing levels across the Scottish private sector also expanded for the fourth straight month in May.

“The respective seasonally adjusted index indicated a solid rate of job creation, albeit one that was slightly softer than in April,” said the report.

“Firms attributed the increase in payroll numbers to successfully filling long-standing roles and increased recruitment to help with enhanced workload.

“Moreover, the upturn in employment across Scotland was the fastest of the 12 monitored UK regions.”

Overall, the Scottish private sector signalled a mild expansion in activity in May.

However, the seasonally adjusted Business Activity Index slipped from April’s 10-month high of 54.3 to 50.7 in May.

“Sector data highlighted that the rate of growth in services business activity moderated on the month, while a second successive month of reduction in manufacturing new orders resulted in a fresh reduction in goods output,” said the report.

“Overall growth in new business remained modest as an accelerated expansion at service providers masked the downturn at manufacturers.

“Nonetheless, companies further expanded employment with both sub-sectors registering solid rates of job creation, albeit at slightly softer rates than seen in the previous survey period.”

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, said: “Scotland’s private sector started the second quarter with a solid rise in output in April, but May’s data signal a loss of momentum as services growth slowed and manufacturing output fell for the first time in four months.

“The latest expansion in private sector output was the softest in the current sequence of expansion that began in February. Inflationary pressures cooled as cost burdens rose at the softest pace in two years.

“Nonetheless, both input price and output charge inflation remained stubbornly elevated, and much above their respective pre-pandemic trend levels.

“On a positive note, firms continued to expand workforce numbers. Moreover, solid hiring was reported across both sub-sectors. Additionally, optimism remained strong as private sector firms anticipated growth in the coming year.”