RBS survey points to signs of hope for Scotland’s private sector economy

The downturn in Scotland’s private sector economy eased last month, with “clear signs” of stabilisation, a key monthly survey today reveals.

Malcolm Buchanan, chair, Scotland board, Royal Bank of Scotland. Picture: Gary Baker

The seasonally adjusted headline Royal Bank of Scotland business activity index – a measure of combined manufacturing and service sector output – registered 49.3 in July, rising noticeably from 37.1 the month before, though still below the 50 level that separates expansion from contraction.

July’s outcome signalled the softest fall in private sector output since the current downturn began in March as lockdown kicked in.

However, a sixth consecutive reduction in Scottish private sector employment was recorded in July. Temporary business closures and weak demand conditions amid the pandemic were frequently cited as reasons behind the latest fall.

The fall in staffing numbers was broad-based at the sector level with services again registering the sharper decline, although both segments saw the rate of job shedding ease from June.

Malcolm Buchanan, chair, Scotland board, Royal Bank of Scotland, said: “July data highlighted some encouraging signs that the Scottish private sector is approaching stabilisation.

“There were further reductions in activity and inflows of new business, but the declines were the softest since March and only slight.

“Firms also remained optimistic with regards to output over the coming 12 months. Confidence was the highest since February, with panellists linking positive expectations to hopes of an economic recovery.

“Although July's figures are a significant step in the right direction, we are still yet to see growth. A possible ‘second wave’ of the pandemic and reintroduction of lockdown measures in regions such as Aberdeen has the potential to derail any further moves towards a recovery.”

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