By Ian McConnell
Business Editor
GROWTH of Scotland’s private-sector economy accelerated in February to its fastest pace in three months as the manufacturing sector returned to expansion mode, a key survey shows, but costs and prices surged at record rates.
Scottish growth was second-weakest among the 12 nations and regions of the UK in the Royal Bank of Scotland purchasing managers’ index (PMI) survey. Only north-east England recorded slower expansion than Scotland last month.
The headline business activity index for Scotland climbed from 53.7 in January to 55.5 in February on a seasonally adjusted basis, moving further above the level of 50 deemed to separate expansion from contraction. The rise in the index was driven by manufacturing’s return to growth and an acceleration of the services sector’s expansion.
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Flagging mounting inflationary pressures, Royal Bank said: “The rate of cost inflation was the steepest on record, with respondents citing greater fuel, material, energy and staff costs. As a result, firms raised their average [prices] charged at the quickest rate in the series history.” The survey began in 1997.
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Scottish firms recorded a further overall rise in staffing levels in February, stretching the current sequence of net hiring to nearly a year. However, Scotland recorded the third-weakest employment growth among the UK nations and regions in February, with only north-east England and Northern Ireland seeing a slower increase.
Scottish companies’ confidence about prospects for increased business activity on a 12-month horizon rose further in February, to its highest since last July. Royal Bank flagged anecdotal evidence that “optimism was driven by hopes of a strong rebound following the easing of Covid-19 restrictions”.
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