THE downturn in Scotland’s private-sector economy deepened in October, a key survey shows.
Royal Bank of Scotland’s business activity index for north of the Border, which covers the manufacturing and services sectors, tumbled from 48.0 in September to 45.8 last month on a seasonally adjusted basis. This took it much further below the level of 50 deemed to separate expansion from contraction.
Manufacturing suffered a deeper downturn than services in October, Royal Bank said.
The private-sector economy north of the Border has, according to the Royal Bank PMI (purchasing managers’ index) Scotland report published today, now experienced three consecutive months of contraction.
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The Bank of England earlier this month forecast a two-year recession in the UK.
Judith Cruickshank, who chairs Royal Bank’s Scotland board, said: “As we proceed into the final quarter of the year, market conditions are set to become more challenging. The aggressive interest-rate hikes, the decline in the value of sterling against the dollar and the rebound in post-Covid demand phasing out, all amidst the ongoing cost-of-living and energy crises, all point to an extremely difficult period for Scotland.”
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The pace of increase of the workforce in Scotland’s private-sector economy slowed in October to its joint-weakest in the current 19-month period of employment growth. In services, staffing growth slowed. Manufacturers meanwhile reported their first overall reduction in employment since January last year.
Business confidence across Scotland was broadly in line with that recorded for the UK as a whole, Royal Bank noted.
New orders fell for a fourth consecutive month in October, and the rate of decline accelerated.
Ms Cruickshank said: “The Scottish private sector reported a third month of contraction during October. The downturn in activity quickened on the month, as stubbornly high inflationary pressures, the ongoing cost-of-living crisis and a threat of recession deterred growth.”
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