SCOTLAND’S private-sector economy grew in August at its fastest monthly pace for more than six years but staff numbers fell for a seventh consecutive month, albeit the employment decline was the least bad in the UK, a survey shows.

Royal Bank of Scotland’s PMI (purchasing managers’ index) report revealed a faster pace of job-shedding in services than in manufacturing north of the Border. The overall monthly rate of decline in employment in the Scottish private-sector economy was the slowest since February. Although still sharp, it was less steep than in all other 11 nations and regions of the UK covered by the survey.

The Scottish business activity index rose from 49.3 in July to 55.8 in August on a seasonally adjusted basis, rising above the level of 50 deemed to separate expansion from contraction to signal the fastest monthly growth since July 2014. Scotland’s growth rate in August was significantly ahead of that in Northern Ireland and Wales but was adrift of expansion in all of the English regions.

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The survey signalled the fastest growth in new business for Scottish companies since October 2018.

In Scotland, manufacturers recorded significantly sharper increases in output and order book volumes than service providers.

The overall rise in new business in Scotland’s private-sector economy in August was the first in six months.

Commenting on the increase in new business, Royal Bank said: “The easing of lockdown measures and improved client demand were frequently associated by panellists to the rise.”

Companies cited continuing subdued demand and a weak outlook in the context of the continuing decline in employment.

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Royal Bank said: “August data highlighted a seventh consecutive monthly reduction in private-sector employment across Scotland. There were further reports of redundancies and lay-offs in anecdotal evidence, with respondents in some sectors linking job cuts with still-muted demand and a weak outlook. The rate of job-shedding was the slowest since February, but still sharp.

“At the sector level, the reduction in staff numbers was broad-based. Services firms again registered a sharper reduction than manufacturers.”

Scottish companies continued overall to project growth in business activity on a 12-month horizon. However, they were less optimistic than their peers in most other nations and regions of the UK. Overall, only businesses in north-east England and Northern Ireland were less upbeat than those in Scotland.

Malcolm Buchanan, who chairs Royal Bank’s Scotland board, said: “The Scottish private sector showed some very encouraging signs in August. Business activity rose at the quickest rate since July 2014 and new orders increased for the first time since February, amid reports that looser lockdown restrictions had allowed the economy to reopen and released pent-up client demand.

“Still, things are not back to normal. Capacity pressures remained weak and, as a result, firms made further cuts to their workforces. The rate of job-shedding remained sharp, despite easing further from April’s record.”

He added: “Although data provided positive signs that the recovery is beginning, ongoing improvements in demand conditions are needed to ensure it keeps momentum.”