Growth continues in Scots private sector and jobs

Port of Grangemouth

The latest Royal Bank of Scotland Purchasing Managers Index (PMI) report has revealed a further rise in output across the Scottish private sector midway through the opening quarter.

The employment picture across Scotland also improved, with job creation entering its 13th consecutive month in February.

The overall rate of job creation hit a nine-month high.

The rate of growth in workforce numbers across Scotland outpaced every other UK nation and region in February.

The headline Scotland Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of Scotland’s manufacturing and service sectors – rose to 52.1 in February from 51.7 in January to signal the strongest expansion in private sector output since June 2023.

However growth in output was once again concentrated in the service sector.

“That said, a softer contraction in manufacturing output meant that the downward pressure on overall performance eased somewhat,” said the report.

“Additionally, the employment picture again strengthened in February. Both the tracked sub-sectors of the economy recorded growth in staffing levels, with the overall rate of job creation ticking up to a nine-month high.

“A fresh and modest rise in new business was recorded across Scotland during February, thereby ending a seven-month run of contraction.

“The latest upturn was solely driven by a stronger uptick in new business received at service providers; amid reports of a growing client base, new contract wins, increased advertising and commencing of new projects.

“Meanwhile, goods producers signalled a further sharp contraction in factory orders.”

Job creation entered its 13th consecutive month in February. The pace of expansion quickened from January to the fastest since May last year.

“The upturn was supported by a fresh rise in staffing levels at manufacturers and a stronger uptick at service providers,” said the report.

“Anecdotal evidence noted successful recruitment drives and increased business requirements.

“Moreover, the rate of growth in workforce numbers across Scotland outpaced every other (UK) nation and region in February.”

The report said private sector companies across Scotland worked through their backlogs during February. The downturn was concentrated at the manufacturing sector, with firms blaming another decline in new orders.

However, this was partially offset by a fresh rise at service providers. The overall rate of depletion, therefore, moderated to signal the weakest drop in outstanding business since mid-2023.

Judith Cruickshank, chair, Scotland Board, Royal Bank of Scotland, said: “February numbers for Scotland signalled solid gains across the private sector.

“The fresh growth seen at the start of the year was sustained and even strengthened, as the downward pressure from the manufacturing sector dissipated slightly, and growth across the service sector was maintained.

“However, the latest expansion across the Scottish private sector was heavily reliant on the service sector, while goods producers failed to perform under the weight of a worsening demand climate.

“That said, the recent expansion in employment across both the sub-sectors alludes to more balanced growth in the coming months.”