By Ian McConnell

SCOTLAND last month recorded the third-fastest economic growth among the 12 UK nations and regions, behind only London and south-west England, a survey published today reveals.

The purchasing managers’ index report, covering the private sector economy, shows Scotland achieved its fastest growth in 11 months in April. Royal Bank of Scotland noted as it published its PMI survey that this “was supported by a strong and renewed upturn in manufacturing production”. It added that a sharp expansion has been recorded again in services, although growth momentum in this sector had “waned slightly”.

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However, as in other parts of the UK, inflationary pressures were intense. The rates of increase of costs and prices charged were the sharpest since the survey began in 1997.

Royal Bank said: “The rate of input price inflation accelerated to a new record high for the third month running, with firms attributing this to higher labour costs, as well as greater raw material, fuel, food and energy prices. Brexit, Covid-19 and the war in Ukraine...added further strain, according to some respondents.”

Optimism in Scotland, in terms of companies’ views of the prospects for increased business activity on a one-year horizon, was the weakest for 18 months, although Royal Bank noted it was nevertheless “robust”.

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Employment grew in Scotland for a 13th consecutive month in April, but the rate of job-creation was joint-slowest in a year and third-weakest among the UK nations and regions, ahead of only Northern Ireland and north-east England.

The business activity index for Scotland rose from 58.4 in March to 58.9 in April on a seasonally adjusted basis, well above the 50 no-change mark.

Malcolm Buchanan, who chairs Royal Bank's Scotland board, said: "Scotland’s private sector improved strongly during April as business activity increased at the fastest rate for almost a year. Although growth momentum waned slightly across the service firms, the increase was sharp as firms continued to reap rewards from reduced Covid-19 restrictions. Meanwhile, goods producers saw an upturn in output and order book volumes after experiencing a downturn in March.

“Inflationary pressures continued to build and were further aggravated by ongoing supply chain issues. According to the evidence, higher raw material, fuel, energy and labour costs resulted in the steepest increase in input prices on record. Subsequently, charges were also raised to the greatest extent ever seen by the survey as firms sought to cover rapid cost inflation."

He added: "The level of confidence slipped [to] the lowest in 18 months as firms raised their concerns about the economic impact of inflation. Nevertheless, it still indicated a robust level of optimism as many firms were hopeful of activity growing in the coming 12 months.”