Bank of Scotland

Bank of Scotland PMI: Private sector growth eases in November

09 December 2013

  • Slowest increases in business activity and new work for six months
  • Employment continues to rise at solid pace
  • Input price inflation ticks up to eight-month high

Growth of Scotland’s private sector economy lost some momentum in November, with the latest Bank of Scotland PMI report showing the slowest rises in output and new work for six months. The rate of job creation was little-changed from the solid pace seen in October, however. On the price front, average costs rose at the fastest rate since March, but competition helped ensure that these inflationary pressures were mostly absorbed by businesses.

November saw another rise in the level of business activity in Scotland’s private sector economy. However, the pace of growth eased further from the recent peaks in August and September, and was notably slower than the UK average. This was highlighted by the Bank of Scotland PMI – a composite indicator designed to gauge month-on-month changes in combined manufacturing and services output – falling from 57.8 in October to a six-month low of 55.2.

At the sector level, manufacturing output stagnated having previously risen for seven straight months, while growth of business activity at services firms was the slowest since July, although still solid.

In line with the trend recorded for business activity in Scotland, new work also increased at the slowest rate for six months in November. Weighing on the overall level of new business was a slight reduction in manufacturing new export orders, the first such fall in five months.

A solid rate of job creation was maintained into November, marking the twelfth successive monthly rise in private sector employment north of the border. Both manufacturers and service providers added more staff during the month, the latter at a slightly faster rate.

Growing intakes of new work led to the build-up of outstanding business during November, as has been the case in each of the past six months. The rate at which backlogs accumulated was the slowest since August, however, and only modest.

Survey data meanwhile highlighted a rise in cost pressures facing Scottish businesses, with the rate of input price inflation edging up to an eight-month high and slightly above the long-run series average. Despite this, output prices were raised only marginally on average since October, which anecdotal evidence suggested was partly a consequence of competition and associated efforts to secure new business.

Donald MacRae, Chief Economist at Bank of Scotland, said: “The private sector of the Scottish economy grew in November. New work continued to increase but at the slowest rate for six months. Both manufacturers and service providers added more staff demonstrating confidence for the future. The recovery in the Scottish economy continued in November but at a slower pace than the survey-record levels of August and September.”

Read full press release