By Kristy Dorsey
Scotland’s economy continued to rebound from the depths of lockdown during July, but shortages of materials and labour saw costs rise at the fastest rate recorded since the early part of 2011.
According to the Royal Bank of Scotland PMI report, which tracks the private sector, activity across the manufacturing and services industries rose for a fifth month in a row. The reading of 57.5 - with anything above 50.0 signalling expansion – was described as a “sharp” increase, though it was off May’s 58.4 reading.
However, inflationary pressures intensified further as supply constraints, Brexit-related costs and rising bills for utilities, staff and fuel piled on additional costs. As a result, companies increased their average charges to the greatest degree in the series history.
READ MORE: UK inflation surges again, beats all forecasts
Inflows of new work continued to rise in July for the fourth month in a row, with survey respondents saying that the the easing of lockdown measures, the resumption of international travel and stronger client confidence all helped boost demand. The rate of growth eased further from May’s peak record, though remained among the quickest in the survey’s history.
Malcolm Buchanan, chair of the Scotland board of the Royal Bank of Scotland, said the overall picture was that of another strong performance, though inflationary pressures will remain a "key concern".
“Business activity rose again, with the rate of increase close to the survey record, despite easing amid slower manufacturing growth,” he said. “Inflows of new work too remain strong as looser Covid-19 restrictions continue to bolster demand.
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“The continued recovery again brought with it intense inflationary pressures, however. Costs rose at the fastest pace for over a decade, with companies increasing their charges to a record degree as a result.”
Business confidence remains elevated for the moment. Sentiment improved during July and was the seventh-strongest on record, though still weaker than in the February to May period earlier this year.
Optimism stemmed from firmer demand, the easing of Covid restrictions and hopes of a sustained economic recovery.
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