SCOTLAND was one of only two parts of the UK to avoid a contraction in private-sector economic output in December, a key survey shows.

Output north of the Border stagnated last month on a seasonally adjusted basis, having grown slightly in November, according to Royal Bank of Scotland’s latest PMI (purchasing managers’ index) report.

London recorded growth in December. In contrast to London and Scotland, the other 10 nations and regions of the UK covered by the PMI survey endured contraction last month, with Northern Ireland seeing the steepest drop in output.

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The UK as a whole recorded a fall in output in December. The Chartered Institute of Procurement and Supply has highlighted the dampening impact of Brexit in its surveys of UK-wide activity.

Scotland’s manufacturing sector contracted for a seventh consecutive month in December, while services output rose only marginally, the PMI report shows. The combined Scottish output index for these sectors dipped from 50.9 in November to the 50 no-change mark on a seasonally adjusted basis.

Overall, employment in Scotland’s private-sector economy was flat in December. Manufacturing recorded a sixth straight monthly fall in staffing, while the services sector reported a slight increase in employment.

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New orders for Scotland’s private-sector economy showed a renewed fall in December, driven by the sharpest drop in incoming business for manufacturers since March 2009. The services sector’s new orders rose.

Overall new orders in Scotland have now fallen in four of the last five months. However, the overall decline in new orders in Scotland in December was “mild”, Royal Bank noted.

However, Malcolm Buchanan, who chairs Royal Bank’s Scotland board, noted the fall in new orders north of the Border contrasted with a slight rise in incoming business in the UK as a whole.

He said: “Private-sector activity in Scotland stagnated at the end of 2019, with the manufacturing downturn continuing for the seventh month running, to cancel out marginal services growth. ”

Overall sentiment among Scottish companies about prospects for increased activity on a one-year horizon rose to its highest for six months but was nevertheless muted by historical standards.

UK manufacturing activity dropped last month, with the pace of decline accelerating from November, according to CIPS, while the services sector stagnated. As with the Royal Bank reports on activity for the nations and regions of the UK, the CIPS surveys are compiled by IHS Markit.

Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said last week of CIPS’s UK-wide survey findings: “Even allowing for the fact that the purchasing managers’ surveys can tend to present an overly gloomy picture at times of heightened uncertainties, the December surveys fuel suspicion that the UK economy likely stagnated in the fourth quarter.”

Bank of England Governor Mark Carney last week signalled the possibility of a cut in base rates from 0.75 per cent if evidence built that current UK economic weakness could persist.