Scotland’s private sector growth rate at lowest since April

Data shows inflation has hit a series record for the second month running, the latest Royal Bank of Scotland PMI shows.

Service providers and manufacturers registered broadly similar rates of growth in the latest period (Jane Barlow/PA) (PA Archive)

The rate of business growth in Scotland’s private sector is at its lowest since April, a report has shown.

The data, seen in the latest Royal Bank of Scotland PMI, shows the bank’s business activity index – a measure of combined manufacturing and service sector output – dropped from 56.3 in October to 55.9 in November.

The report also shows inflation has hit a series record for the second month running.

Input prices for Scottish private sector firms rose for the 18th month in a row – the fastest rate on record, the report said.

Price pressures and supply delays remain a key cause for concern

Malcolm Buchanan, Royal Bank of Scotland

Supply shortages, transport issues, Brexit and Covid-19 were all referenced as drivers of the latest increase in prices.

Firms’ average costs for clients also increased for the 13th time in as many months in November, with the latest rise being the quickest on record and rapid overall, the report said.

Business activity in the country, however, rose amid reports of strong client demand, which was partly due to looser Covid-19 restrictions.

The report also said firms remained “optimistic” about the next 12 months in the hope that further loosening of pandemic-related restrictions will help client demand.

New business at Scottish private sector firms increased for the eighth month in a row in November, and at sector level, services firms reported a much steeper upturn in new work than manufacturers.

The November data also showed an increase in workforce numbers at Scottish firms, with companies taking on additional staff due to business activity being on the rise.

Although the slowest since April, the rate of job creation was among the fastest on record, the report said.

Service providers and manufacturers registered broadly similar rates of growth in the latest period.

Malcolm Buchanan, chairman of the Scotland Board at 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.”