Poor market conditions hit Scottish firms

Fuel tankers The cost of fuel is one of the factors putting pressure on businesses

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Scottish businesses reported worsening market conditions last month, according to a survey of purchasing managers.

The Bank of Scotland monthly report, carried out by the Markit financial information firm, found orders down and costs rising.

This regular check on the order books of Scotland's private companies has previously been more positive than other data over the downturn.

These figures suggest the economy is close to contraction.

The service sector saw the weakest growth figures since last May, and factory production continued to fall.

New orders fell for the fifth month in a row, including another fall in manufactured exports.

The purchasing managers' survey showed falling backlogs of work.

Along with spare capacity, that helps explain why employment last month was static.

While companies faced growing pressure from rising costs of input materials, including fuel, food and labour, that was not matched by rising output prices.

The findings are in line with the UK as a whole, and follow figures last week showing UK industrial production sharply down in October, and threatening another dip into recession this winter.

Donald MacRae, chief economist at the Bank of Scotland: "The private sector of the Scottish economy grew marginally in November with growth in the service sector offsetting a fall in manufacturing output.

"The Scottish economy is showing the strains of maintaining growth momentum against a background of weak domestic and international demand.

Despite this challenging environment, employment was maintained in the month".

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