By Ian McConnell
THE rate of decline of Scottish private sector economic output accelerated sharply in January, amid stricter lockdown measures, a key survey shows.
Royal Bank of Scotland’s purchasing managers’ index report also shows continued job-shedding. The fall in employment in January was the least-steep monthly drop since the current run of decline began last February, although Royal Bank noted it was nevertheless sharp. The survey cited reports of redundancies, lay-offs and use of the UK Government furlough scheme.
The headline Scottish business activity index, a combined measure of manufacturing and services output, dropped from 47.3 in December to 33.3 in January on a seasonally adjusted basis to signal faster decline. The level of 50 is deemed to separate expansion from contraction, and the January reading signals the sharpest decline since May last year. New business for Scottish companies also fell at the fastest pace since last May.
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Royal Bank noted that, apart from the March to May 2020 period, the January reading was the weakest since comparable records began in 1998.
However, the survey signalled expectations of a rise in output on a 12-month horizon among Scottish companies were at their highest since April 2014, “on the back of the ongoing vaccine rollout”.
Malcolm Buchanan, who chairs Royal Bank’s Scotland board, said: “Stricter lockdown measures took a toll on the Scottish private sector during January, with the downturn worsening amid steep drops in both activity and new business.
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“The falls remained slower than at the height of the first lockdown last spring, perhaps reflective of companies adapting to restrictions, but were still severe.”
He added: “Positive news again came from business confidence...amid hopes of an economic recovery once restrictions are lifted.
“Conditions will remain very challenging in the meantime, but there is a light at the end of the tunnel for Scotland’s economy as the vaccine rollout progresses and measures are loosened.”
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