GROWTH of Scotland’s private sector economy accelerated in April to its fastest pace since last autumn, with companies enjoying strong overall increases in new orders and employment, a key survey reveals.
The IHS Markit Scotland PMI (purchasing managers’ index), a single-figure measure of the month-on-month change in combined manufacturing and services output, rose to 52.6 in April from 50.8 in March on a seasonally adjusted basis.
This took it significantly further above the level of 50 deemed to separate expansion from contraction to signal the fastest growth since October 2017. The growth was driven by the services sector, with IHS Markit noting manufacturing production had fallen in April for a third straight month.
Overall growth in new orders for Scottish companies accelerated last month to its fastest pace since December 2014. Services companies noted a significantly faster rise in order book volumes than their manufacturing counterparts, IHS Markit noted.
The survey points to the fastest growth in employment in the Scottish private sector economy for eight months, with strong job creation in both manufacturing and services.
Companies north of the Border signalled their greatest optimism since January in terms of prospects for increased activity.
Scottish companies faced another sharp rise in operating expenses in April, with the rate of input price inflation the highest for three months.
IHS Markit said anecdotal evidence suggested food, fuel and labour costs had all increased. Sectoral data indicates manufacturers are, overall, facing greater cost pressures than services companies. Sterling’s post-Brexit vote weakness has fuelled inflation by increasing the cost of imports.
Overall output price inflation in April was the sharpest in 15 months.
Joe Hayes, economist at IHS Markit, said: “Private sector business activity expanded to the greatest extent since October last year in April, aided by the strongest influx of new work in 40 months.
“Buoyed by healthier demand conditions, confidence improved to the highest since January. To accommodate the gain in workloads, additional staff were hired in April. The rate of job creation was solid, accelerating in both the manufacturing and service sectors.”
Separately, a survey published today by the Institute of Chartered Accountants of Scotland, in association with law firm Brodies, shows deepening pessimism among finance chiefs about the ultimate impact of Brexit.
They are projecting an even-greater negative impact post-Brexit than they were last spring in terms of both their organisations and the UK economy.
Finance chiefs are also signalling a greater negative impact on their organisations so far than they indicated in spring last year.
Businesses have also ramped up contingency planning, the survey shows.
About 40% of large organisations say they have considered location issues and 51% have reviewed supply-chain factors.
Among smaller organisations, 18% have considered location issues, and 28% have reviewed supply-chain factors.
The survey was completed by more than 350 ICAS members.
Finance chiefs welcomed key aspects of the Brexit transition deal agreed by the UK and EU, including remaining part of EU trade deals during this period.
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