Scots firms expand output for sixth successive month

Port of Grangemouth

Scottish private sector companies expanded their output for the sixth successive month in July, according to the latest Royal Bank of Scotland PMI survey.

However, the rate of increase slowed since June as the seasonally adjusted Composite Output Index fell to 51.1 from 53.2.

The July PMI data signalled a rise in employment across Scotland for the sixth consecutive month.

Panellists reported success in filling long-standing vacancies and replacing voluntary leavers.

However, the upturn was only fractional amid a fresh reduction in services employment, while manufacturers recorded the softest expansion in five months.

“Trends diverged on a sector level with service providers continuing to report modest, albeit slightly softer growth in business activity,” said the report.

“Goods producers, however, signalled a renewed and sharp contraction in output amid reports of demand shortfalls.

“New business received across Scottish private sector firms remained broadly unchanged at the start of the third quarter.

“Albeit only fractionally, the seasonally adjusted index dipped below the crucial 50.0 mark for the first time in six months, led by a deepening contraction at manufacturers amid reports of reduced demand from clients and market inactivity.

“Meanwhile, service providers signalled a slowdown in new business growth.”

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, said: “The start of the second half of the year saw a slowdown across the Scottish private sector amid a softer expansion in output, while new business remained broadly unchanged from June.

“Data split by sector highlighted that growth was skewed towards the service sector. Goods producers, meanwhile, pointed to a continual and accelerated drop in factory orders which then fed into a fresh contraction in manufacturing production.

“The overall cooling in business activity growth meant that employment levels were raised only fractionally in July.

“Moreover, the rate of job creation was the weakest seen in the current six-month spell of employment growth.

“With the level of outstanding business falling for the third month straight, there’s less incentive for firms to raise workforce numbers in the coming months.

“Additionally, the outlook for business activity remained historically muted, with confidence printing the weakest since January.”