Scotland business

Scottish private sector 'lifted by new orders'

Worker at bridge components factory Image copyright Getty Images
Image caption The latest PMI data pointed to a marked increase in manufacturing production in January

The recent upturn in Scotland's private sector strengthened last month as firms reported the fastest growth in new orders for 20 months, according to a survey.

The latest Bank of Scotland PMI suggested a four-month high in combined manufacturing and services output in January.

However, the rate at which business conditions improved was "only modest".

The report indicated that backlogs of work continued to deteriorate.

Employment also fell slightly, having risen slightly at the end of 2016.

This was despite survey data pointing to a marked increase in Scottish manufacturing production, with the rate of growth accelerating at its quickest rate in 34 months.

In contrast, service providers reported that business activity stagnated last month.

Where an increase in output was recorded, firms attributed this to higher levels of new business, while declines were partly linked with Brexit uncertainty.

Sub-sector data showed an uptick in activity in business services and financial services, while travel, tourism and leisure firms registered a decline.

Image copyright Thinkstock
Image caption The survey suggested business activity in the service sector stagnated last month

Meanwhile, the survey suggested that both manufacturing and services companies reacted to a sharp increase in their input costs last month by raising selling prices at historically strong rates.

Nick Laird, from Bank of Scotland Commercial Banking, said: "The start of 2017 proved promising for Scottish private sector companies, as new order growth accelerated to a 20-month high, encouraging firms to raise business activity faster.

"Pleasingly, the expansion in new work came in the face of the fastest increase in selling prices since February 2011, with this trend looking likely to be maintained over the coming months."

He added: "Underneath the positive headlines however, we note that the increase in demand was more positive for Scotland's manufacturers than their service sector counterparts.

"As such, whilst the latest figures give cause for optimism, the overall improvement in business conditions for the Scottish private sector remained modest."

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