Fears over cost rises as business continues to boom

Scottish firms are increasing their prices to customers at a record pace as a result of rising costs, according to a new report.

The latest Royal Bank of Scotland (RBS) PMI figures for June showed that business activity continues to be very strong as Covid-19 restrictions ease.

Although the seasonally adjusted headline index was slightly down from May's record of 61.5, it was still the second-quickest increase in output since the data collection began in 1998.

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However, inflationary woes worsened, with input prices rising at the quickest pace for more than a decade. Panellists attributed greater costs to material shortages, Brexit and higher fuel and utilities prices.

RBS's Malcolm Buchanan says the latest economic data point to a strong third quarter for Scottish firms. Picture: contributed.
RBS's Malcolm Buchanan says the latest economic data point to a strong third quarter for Scottish firms. Picture: contributed.

A third straight monthly increase in the level of new business at Scottish companies was recorded during the month.

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Private sector employment across Scotland continued to rise during June, extending the current sequence of increases to three months. The rate of job-creation slowed from May's peak, but was still the second quickest on record.

Malcolm Buchanan, chair of RBS’s Scotland board, said that overall the data shows the private sector “remains in a good position” as we enter the third quarter.

“Growth showed little sign of slowing notably in June, and firms remained among the most confident on record of higher activity in the coming 12 months,” he said.

“The rates of increase in both business activity and new work slowed only slightly from May's respective series records and remained marked.”

However, he said inflationary pressures are a key concern, as material shortages and greater fuel and utilities fees continued to put “severe upward pressure” on input costs and selling prices.”

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