GROWTH in Scotland’s private-sector economy almost ground to a halt last month as manufacturing output fell and services expansion weakened, while employment fell for the first time since May 2017, a survey shows.

Royal Bank of Scotland’s latest PMI (purchasing managers’ index) report, published today, also shows business confidence north of the Border dropped to a 35-month low in July.

The Scottish business activity index fell from 51.3 in June to 50.2 last month on a seasonally adjusted basis, only marginally above the 50 no-change mark, to signal near-stagnation of the private sector economy.

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However, only six of the 12 nations and regions of the UK covered by the Royal Bank survey achieved any growth of business activity.

The PMI survey findings chime with a raft of weaker UK economic indicators, as Brexit uncertainty weighs.

Sterling has been spooked in recent weeks by the ascension of Boris Johnson to Prime Minister. This elevation has ramped up fears of a no-deal Brexit. Mr Johnson has repeatedly emphasised his intention to take the UK out of the European Union – with or without a deal – on October 31. Data published on Friday by the Office for National Statistics revealed that UK economic output dropped by 0.2 per cent in the second quarter – the first decline since 2012.

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Royal Bank’s survey signals a sharp drop in new orders for Scottish manufacturers. However, demand for services drove an overall rise in new business in Scotland’s private-sector economy.

Malcolm Buchanan, who chairs Royal Bank’s Scotland board, said: “Having been one of the top-performing areas of the UK in June, Scotland’s private sector approached stagnation at the start of the third quarter, growing only fractionally. The main source of weakness remained manufacturing, where production was cut back at a sharper rate amid a deeper downturn in demand. Slowing global growth remained a key factor that panellists attributed challenging manufacturing conditions to.”

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Mr Buchanan offered his view that “the recent bout of sterling depreciation may act as a temporary boost to sales for Scottish manufacturers” although he observed this could “come at a price of greater imported costs”.

He added: “The drop in business confidence to a 35-month low in July was underpinned by concerns towards the UK economy, raising question-marks as to whether the positive growth trend in services can continue.”