Scotland business

Scotland's private sector growth 'slows down'

Man working at machine Image copyright Thinkstock
Image caption Bank of Scotland recorded a fall in output and new orders in manufacturing

Scotland's private sector continued to grow in August but at a slower rate than before, according to a Bank of Scotland survey.

Manufacturing output saw a marked rate of expansion, while activity in services grew at a more modest pace.

It means Scotland's private sector has had nine months of growth in a row.

The bank's monthly PMI survey indicated job creation remained solid in August - with companies taking on staff to meet the demands of rising output.

Although growth softened since the 33-month high recorded in July, the latest expansion was the second-fastest since July 2015.

Fraser Sime, Bank of Scotland regional director, said: "Although the most recent figure represented a slowdown in growth, the rate of expansion remained moderate overall and one of the strongest recorded over the past two years.

"Job creation also remained strong, with many panellists reporting that salaries were being pushed up as a result of the tight labour market.

'Muted optimism'

"Furthermore, rising staff and raw material costs were key drivers behind the latest increase in price pressures.

"Despite the upturn seen in the sector over the past two months, confidence towards future growth prospects softened to a four-month low in August, indicating a muted level of optimism from businesses operating in Scotland."

The seasonally adjusted headline Bank of Scotland PMI - a single-figure measure of the month-on-month change in combined manufacturing and services output - fell to 52.2 in August, from 53.8 in July.

But it remained above the average seen throughout 2017 so far and extended the amount of continued growth to nine months.

Manufacturing output saw a marked rate of expansion, while the service sector's activity grew at a more modest pace. On the price front, price pressures remained sharp in August.

Job creation in the Scottish private sector was solid in the latest survey, making the current sequence of growth three months.

Companies reported they had hired additional staff to meet rising output requirements.

Economic upturn

Optimism towards future growth prospects softened in the latest survey.

The level of confidence remained positive overall, however, with many panellists expecting an economic upturn.

Economy Secretary Keith Brown said: "The latest Bank of Scotland PMI figures signal further expansion in Scotland's private sector output and employment in August, supported by growth in new business, whilst business confidence remains positive.

"These results are a further vote of confidence in the Scottish economy with GDP growth almost four times that of the UK over the first three months of the year, and employment at a record high.

"While this is encouraging, Brexit uncertainty continues to cast a shadow over the future economic outlook, threatening jobs, investment and living standards.

"The Scottish government will continue to use all of the powers at our disposal to grow the Scottish economy."

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