WORRYING news is not hard to find on the economic front. While the Scottish economy was found to have defied recession in the first quarter, the 0.8 per cent expansion of GDP, which followed a 0.2 per cent contraction in the last quarter of 2016, is not much to write home about. Now a key survey tells us the rate of growth in the private sector economy slowed in June.
Although the private sector grew again in Scotland last month, the score of 51.1 registered in the Bank of Scotland’s latest PMI signals that the composite reading of activity by manufacturers and services companies is barely above the point of contraction.
Manufacturing, which Bank of Scotland’s Fraser Sime said had previously been a driver of private sector growth, softened in June, and output remained subdued among services firms.
That manufacturers and services providers are struggling to expand is perhaps no big surprise. Input costs, which have risen hugely on account of sterling’s collapse since the Brexit vote, remain high, and consumer confidence is faltering as inflation continues to surge.
The fragility of the wider UK economy was laid bare as a slew of key economic data was announced on Friday, when official figures showed that output by factories and the construction sector unexpectedly contracted.
Searching for the positives, it is heartening that the latest PMI signalled an easing of cost inflation and a return to employment growth in the private sector. But with uncertainty the watchword while the Brexit process takes place, it is hard to imagine conditions brightening soon.
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