Growth in Scotland’s private sector continues

The Bank of Scotland's purchasing managers index shows output and employment have risen. Picture: Ian Rutherford

Output and employment both increased in April, albeit at a slower pace than previous months, according to the Bank of Scotland’s purchasing managers’ index (PMI).

The pace of expansion in output was the slowest in 2014 so far but faster increases in new business and backlogs of work pointed to an upturn being sustained.

Labour market conditions also improved during April, with private-sector companies adding to their payroll numbers for the seventeenth straight month. The rate of staff hiring was slowest since January but was still described as solid.

The PMI is compiled from monthly replies to questionnaires sent to purchasing executives in about 600 manufacturing and service sector companies.

It registered 54.8 in April - which was down from 56.4 the previous month - the lowest reading this year. However, experts said the opening quarter of 2014 saw relatively high readings and April’s figure was “still consistent with a solid rate of expansion overall”.

Anything above 50 constitutes growth, 50 means no change and below 50 suggests economic contraction.

Although a slight slowdown in output growth was noted, the level of new business placed with private firms rose at a faster rate in April - the most marked since January.

The survey also showed slightly faster rises in both input costs and average output prices.

Donald MacRae, chief economist at Bank of Scotland, said: “April’s PMI was a solid 54.8, indicating continuing growth in the Scottish economy in the month.

“The recovery is broad-based, with output growing in both services and manufacturing sectors, accompanied by rising employment and a growing level of new business.

“A strong pound may be contributing to new export orders falling marginally for the third consecutive month.”