SCOTLAND’S private-sector economy contracted for a fourth straight month in March as services output fell, a key survey published today shows, with Brexit cited as a drag.

And there was only a slight rise in employment in the private-sector economy north of the Border last month, according to the Royal Bank of Scotland PMI (purchasing managers’ index) survey.

Royal Bank’s output index for Scotland edged up from 49.4 in February to 49.6 in March on a seasonally adjusted basis but was below the level of 50 deemed to separate expansion from contraction for a fourth consecutive month.

Manufacturing output, which has been a significant drag on the Scottish economy’s performance in recent months, showed a slight improvement in March. However, the services sector slipped into contractionary territory.

New orders fell in the Scottish manufacturing sector, and broadly stagnated in services, with Brexit uncertainty flagged by companies as a key factor dampening demand.

At 50.4, the employment index for Scotland indicated only a marginal rise in the private-sector workforce. The manufacturing sector reduced its workforce slightly, while services recorded marginal employment growth.

Malcolm Buchanan, who chairs the Scotland board of Royal Bank, said: “Hesitancy among clients, Brexit-related uncertainty and general underlying demand weakness were factors firms attributed to sluggish sales and weaker business activity during March. Amid reports of rising labour costs, employment levels were relatively flat, reflecting subdued demand faced by Scottish businesses.”