Scottish businesses see rapid growth through August

The Scottish private sector saw further rapid growth in the middle of the third quarter, according to the Royal Bank of Scotland.

His Commercial activity index, which measures the combined output of the manufacturing and services sector, rose from 57.5 in July to 58.1 in August, signaling a sharp rise in activity amid a further sharp increase in new jobs.

The PMI index is compiled by IHS Markit from responses to questionnaires sent to a panel of around 500 manufacturers and service providers. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase from the previous month, and below 50 indicating an overall decrease.

Scotland also recorded the fastest expansion in production in the 12 UK regions monitored in August.

Businesses continued to hire additional staff for the fifth consecutive month, with the job creation rate remaining strong despite the easing.

However, costs rose at one of the highest rates on record amid reports of rising costs for materials, fuel, transportation and wages – with manufacturers particularly hard hit.

Scottish private sector businesses saw increased customer demand in August, with new business expanding for the fifth time in as many months, amid reports of stronger sales due to easing restrictions on lockdown and resumption of international travel.

The growth rate of job creation accelerated slightly during the month and remained close to the May high. At the sector level, the recovery was widespread, with service providers again recording a much faster increase in new business.

Scottish private sector companies remained very optimistic about more business activity 12 months from now in August. Confidence has been attributed to looser foreclosure restrictions, strong demand and hope for a robust economic recovery.

Sentiment moderated to a seven-month low, but remained elevated nonetheless against the background of historical data. Data for August highlighted further signs of pressure on the capacities of Scottish private sector companies, as the level of open business rose again.

Producers of goods continued to register a much faster rate of increase than service businesses during the month of August. In the 12 UK regions monitored, only London experienced a slower pace of input price inflation than Scotland in August.

Malcolm Buchanan, Chairman of the Board of Directors of RBS in Scotland, commented: “New work entries have again risen sharply as more flexible foreclosure measures have continued to drive customer demand and, as a result, companies have hired staff for the fifth consecutive month.

Overall, the latest PMI data points to another strong performance for the Scottish private sector – inflationary pressures remain a concern, but do not appear to be hampering the economic rebound as growth remains close to the record pace of the survey seen in may.”

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