Scottish private sector output 'moves up a gear'

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Scotland's private sector "moved up a gear" last month as output rose at its fastest pace in nearly three years, according to a monthly survey.

Bank of Scotland's latest PMI found growth was driven by a "steady expansion" in new business.

Manufacturing saw strong growth in new orders, while new work in the service sector rose at a more moderate rate.

The survey also indicated an increase in recruitment, with job creation reaching a 31-month high.

The PMI - which measures changes in combined manufacturing and services output - stood at 53.8 in July, the highest figure since October 2014.

Any number above 50 suggests expansion.

Scotland's private sector has now grown for eight months in a row, according to the bank.

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Image caption,
The latest survey suggested that the service sector returned to "meaningful growth" in July

Fraser Sime, from Bank of Scotland Commercial Banking, said: "July's survey results signalled the Scottish private sector moving up a gear, as the PMI posted its strongest result in 33 months.

"This good news was fuelled by the service sector returning to meaningful growth, alongside a faster increase in manufacturing output.

"Job creation remained positive for the second month running, with July marking the fastest expansion in employment in over two-and-a-half years.

"Employment growth was consistent across the manufacturing and service sectors."

He added: "Input price inflation remained strong in the latest survey, with many firms citing wage inflation and the exchange rate.

"That said, the positive effects of a subdued currency could be seen in the growth of manufacturing exports in July."

Keith Brown, the Scottish government's economy secretary, said the results were a further vote of confidence in the Scottish economy, coming on the back of GDP figures that showed growth four times that of the UK over the first three months of the year, with unemployment also at a record low of 3.8%.

But he warned that uncertainty over Brexit "continues to cast a shadow over the future economic outlook, threatening jobs, investment and living standards".

A recent survey by Scottish Chambers of Commerce suggested Scotland's economy would continue to grow this year.

Its quarterly economic indicator found most businesses had a positive outlook for the coming months.

However, firms also highlighted longer-term threats to success, such as falling real incomes and rising recruitment problems.

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