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Scotland’s private sector output at slowest rate for five months, says RBS

The findings from Royal Bank of Scotland’s June PMI report reveal that Scotland’s private sector output increased at its slowest rate for five months (John Linton/PA)
The findings from Royal Bank of Scotland’s June PMI report reveal that Scotland’s private sector output increased at its slowest rate for five months (John Linton/PA)

Business growth in Scotland’s private sector has increased at its slowest rate in five months, figures show.

A combined manufacturing and service sector output stood at 54.4 in June, according to the latest Royal Bank of Scotland PMI data, which was down from 55.9 in May.

This decrease shows the slowest expansion in business activity across Scotland since January, the report said.

In addition, data showed new orders rose at a modest pace that was the weakest seen in 15 months.

Malcolm Buchanan of the Royal Bank of Scotland said the private sector had recorded ‘a solid increase in output’ (Royal Bank of Scotland/PA)

While business confidence at Scottish private sector firms remained strong in June, the degree of optimism slipped to a 20-month low last month amid concerns over the cost of living, a possible slowdown in the economy and housing market, and weaker customer confidence.

Optimism across the Scottish private sector was also weaker than that seen across the UK as a whole.

Private sector firms north of the border continued to expand their workforce numbers during June.

The rate of job creation eased from May’s seven-month high but remained stronger than the series average.

Of the 12 monitored UK regions, Scotland registered the weakest expansion in employment, while the north east of England was the only region to report job losses.

A 25th monthly rise in average cost burdens was recorded across the Scottish private sector during June.

While the rate of input price inflation eased for the second-month running from the survey high recorded in April, it remained amongst the steepest on record.

Rising supplier, energy and raw material prices amid ongoing shortages were blamed for the latest surge in costs.

Though rapid, the increase in input prices across Scotland was the softest of all the 12 monitored UK regions.

Private companies across Scotland raised their charges during June, stretching the current bout of output price inflation to 20 months.

The pace of inflation eased on the month to register the slowest since January.

However, the report showed figures remained well above the historical average, indicating a sharp increase in charges levied.

On a regional basis, Scotland recorded the joint-weakest rate of output charge inflation across the 12 monitored UK areas in June, on a par with the east of England.

Malcolm Buchanan, chairman of the Scotland Board of the Royal Bank of Scotland, said the country’s private sector recorded “another solid increase in output” last month, but noted the slow down in business momentum.

“Nonetheless, the sustained upturn in business activity and efforts to build capacity led firms to bulk up their workforce numbers for the 15th successive month during June,” he said.

Mr Buchanan continued: “However, the ongoing shortages of materials, increased energy prices and higher wages all contributed to another surge in input costs during June.

“The rate of input price inflation eased only slightly from May and remained amongst the fastest on record.

“The softer expansions in activity and sales, surging prices and ongoing global uncertainty underscored an increasingly challenging environment for Scottish private sector firms, and led to a decline in business confidence to a 20-month low.”