Related Articles
The Scottish private sector has reported a deepening contraction in private sector output during November.
The latest Royal Bank of Scotland Business Activity Index ticked down from 45.8 in October to 43.9 in November, signalling that fastest decrease in the current series of reduction that began in August.
The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses – varying between 0 and 100 – with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease.
Hesitancy among clients amid economic uncertainty, the cost of living crisis and higher borrowing costs, stifled demand, according to the survey. Consequently, inflows of incoming new business continued to decline in November.
The pace of reduction steepened in November and extended the current run of contraction to five months.
Expectations regarding the 12-month activity outlook across Scotland weakened from October’s three-month high and were subdued in the context of historical data.
RBS stated that new business placed across Scotland’s private sector decreased sharply in November.
The downturn quickened from the preceding survey period to the fastest overall in the current five-month run of contraction. An array of reasons were linked to the latest reduction in sales, including lower market activity, the cost of living crises, rising borrowing costs, and growing economic uncertainty resulting to delayed-decision making.
All of the 12 monitored UK regions reported a decline in inflows of new business, with Scotland registering the third-fastest downturn behind Northern Ireland and the east Midlands.
The survey data signalled muted expectations for the 12-month activity outlook across Scotland.
Business confidence weakened from October’s three-month high, posting well below the historical average. While there were hopes of growth in sales in the coming year, the ongoing downturn in activity weighed on sentiment.
Expectations towards future activity across Scotland were noticeably less upbeat than those recorded at the UK level.
Payroll numbers across Scotland’s private sector firms increased in November, extending the run of job growth to 20 months.
The pace of job creation quickened slightly from October amid renewed growth in employment across the manufacturing sector. However, reports of resignations, rising uncertainty, reduced demand and job cuts resulted in only a marginal overall upturn in hiring activity.
The latest uptick in employment across Scotland printed broadly in line with that at the UK level.
For the sixth time in as many months, levels of outstanding business fell across Scotland during November. The rate of depletion was broadly unchanged from October, indicating a sharp decrease in work-in-hand overall. According to anecdotal evidence, completion of contracts and a drop in sales was linked to fewer backlogs.
The rate of decrease across Scotland outstripped the UK-wide average and was the second most severe after Northern Ireland.
Input prices across the Scottish private sector inclined rapidly during November, thereby extending the current run of inflation to two-and-a-half years. Adjusted for seasonality, the latest reading ticked-up to a three-month high.
Firms blamed the latest increase in average cost burdens on energy prices, wages, higher shipping costs and the cost of living crisis.
However, the pace of input price inflation across Scotland was slightly slower than the UK-wide average.
Charge inflation entered its 25th month across Scotland during November. The pace of inflation further intensified from September’s recent low, signalling the fastest rise in charges in five months, but was marginally weaker than that recorded for the UK as a whole. The latest increase in charges mirrored the upturn in average costs burdens.
Judith Cruickshank, chair of the Scotland board at RBS, commented: “The latest survey data signalled a stronger contraction across the Scottish private sector during November, as demand waned amid market uncertainty and the cost of living crisis – as a result, both activity and incoming new business fell as sharpest rates in the current four- and five-month sequences of reductions.
“Adding further strain on the sector was the continued intensification of price pressures,” she continued. “After cooling over the summer, input price inflation again accelerated in the fourth and final quarter of the year.
“Overall, the penultimate month of the year pointed to confidence among private sector firms registering less upbeat than that seen in October, as economic challenges and feeble demand weighed on exceptions.”
Don’t miss the latest headlines with our twice-daily newsletter – sign up here for free.
Source link
