Scotland's private sector gains further momentum, outpacing UK as a whole
Scotland's private sector recorded further rapid growth midway through the third quarter, according to the latest purchasing managers’ index (PMI) data from Royal Bank of Scotland (RBS).
The lender said its seasonally adjusted headline business activity index – a measure of combined manufacturing and service sector output – rose to 58.1 in August from 57.5 in July, “signalling a steep rise in activity amid a further sharp increase in new work”, with the rates of growth remaining close to May's respective survey highs.
Scotland registered the fastest expansion in output across the 12 monitored UK areas in August. The month pointed to a further uplift in client demand facing Scotland' s private sector firms, who remained highly optimistic of greater business activity in 12 months’ time.
Confidence was attributed to looser lockdown restrictions, strong demand conditions, and hopes of a robust economic recovery. Sentiment moderated to a seven-month low, but nonetheless remained elevated in the context of historical data.
A fifth successive monthly rise in workforce numbers was recorded in August, amid reports that companies were expanding their staffing levels to keep up with demand. Firms continued to take on additional staff for the fifth month running, with the rate of job-creation remaining sharp despite easing.
Additionally, August data highlighted further signs of capacity pressures at Scottish private sector firms, as the level of outstanding business increased again. Moreover, Scotland registered the slowest rate of backlog accumulation across the 12 monitored UK areas during August.
Further intense cost pressures were seen last month, with firms continuing to raise their average charges. Costs rose at one of the steepest rates on record.
Malcolm Buchanan, chair of the Scotland board at RBS, commented: “August data pointed to a further rapid expansion of Scotland's private sector economy, with the rate of growth re-accelerating from July and outpacing the UK as a whole by a wide margin. Services continued to record a faster upturn than manufacturing, although the differential narrowed slightly.
“Overall, the latest PMI data signals another strong performance for the Scottish private sector. Inflationary pressures remain a concern, but do not seem to be hindering the economic rebound as growth remains close to the survey record pace seen in May.”
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