AGAINST a backdrop of diminished forecasts for the UK economy, it was not the greatest surprise to read that growth in the private sector economy contracted in November. In fact, the economy was barley found to have been in growth mode at all, with the Bank of Scotland’s Purchasing Managers’ Index scoring just marginally above the 50 which separates expansion from contraction.
After Chancellor Philip Hammond unveiled downgraded forecasts for the UK economy all the way out to the 2020s, muted growth in the private sector economy in Scotland is to be expected.
Those looking for grounds for optimism in the latest PMI for Scotland may take some succour from a gradual recovery in manufacturing output in the last three months. That is reflected by improving confidence in the sector.
Yet it proved to be a grim month for the dominant services sector, with business activity dropping into contraction mode following six months of expansion. Incoming orders were broadly unchanged and, while services firms expanded their payroll numbers, growth was slight and behind the month before.
The woes felt in the services sector meant the headline PMI for November shifted into reverse, with growth measured at its slowest rate since March.
Bank of Scotland’s Fraser Sime did not refer to Brexit in his press comments directly, but there can be little doubt the ongoing uncertainty is casting a cloud over Scotland’s prospects. Until that lifts, business activity is inevitably going to stutter – and there is certainly no guarantee things will get better once the terms of the divorce are known.
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