The downturn in the Scottish private sector gathered pace in November, when firms recorded fresh record lows on key measures such as output and new business, according to a closely-watched survey.
The downturn in the Scottish private sector gathered pace in November, when firms recorded fresh record lows on key measures such as output and new business, according to a closely-watched survey.
The latest edition of the Purchasing Managers Index (PMI), sponsored by Royal Bank of Scotland, shows firms came under the cosh as a barrage of gloomy news on the economic front rattled nerves and triggered fresh falls in demand but inflation remained stubbornly high.
On the key output measure, Scotland's index score fell from 40.1 to 38.3 in November, well adrift of the 50 mark that separates expansion from contraction.
The survey shows that firms in all sectors struggled, with both services and manufacturing businesses recording the sharpest falls in new business in the 10-year history of the survey.
Hopes that the sharp fall in the value of the pound would provide a boost for exporters were dashed as tough times in key markets like the United States weighed heavily on sales.
A balance of firms in both the manufacturing and services sectors reduced their output prices for the first time in five years, in a telling indication of how tough things are on the demand front.
However, while noting that the decline in activity was broad-based, David Fenton, head of macroeconomics at Royal Bank, said: "Some sectors are under more pressure than others - most notably services.
"For every manufacturer reporting higher output, there were two reporting lower output," he added. "In the service sector, that ratio is one to four."
The survey found that while just 11% of services firms enjoyed increases in activity in November, some 42.7% suffered a reduction.
Activity levels fell at the fastest rates among firms in business services like accountancy and for travel and tourism businesses.
The balance of financial services firms reporting an increase in activity edged up for the first time in five months, to 37.8, from 35.6% in October.
However, as the index remained deep in negative territory there was no indication that the fortunes of firms in the hard-pressed sector had bottomed.
The bad news was compounded by the fact that inflation remained stubbornly high in Scotland compared to most other areas of the UK.
With respondents noting that energy costs remained high, the data may refocus attention on claims that utility firms are failing to pass on the benefits of falling oil prices.
Staff costs also remain high, possibly reflecting the fact that the labour market has been in better shape in Scotland than in the UK this year.
However, the PMI shows that jobs were shed at record rates by manufacturers, services and new economy firms alike in November.
The Scottish Government may take some solace from the fact that the position in Scotland is much better than in some parts of the UK.
The average output index for the UK was 37.8. Scotland ranked fifth in a table of 12 areas, up from sixth in October and seventh in September.
However, Fenton said this had "more to do with the weakness of other regions than any inherent resilience north of the border".
In areas including Northern Ireland and the west and east Midlands of England, the output index has fallen more sharply than in Scotland.
In November, the manufacturing output index fell to 41.4 from 43 in October. The services activity index fell to 36.2 from 38.3. The new economy activity index edged up to 39.9, from 37.8.
