THE private sector in Scotland is “moving up a gear” with output last month rising at the fastest pace in almost three years, according to a new report.
Data from July’s Bank of Scotland’s regional purchasing managers’ index (PMI) signalled a strong start to the third quarter of 2017.
Businesses say the growth reflects stronger expansion in both the services and manufacturing sectors.
Increased output was driven by a steady expansion in new business in July.
The manufacturing sector recorded strong growth in new orders, while new business in the service sector rose at a comparatively moderate rate.
The seasonally adjusted headline Bank of Scotland PMI, a single-figure measure of the month-on-month change in combined manufacturing and services output, rose to 53.8 in July, from 51.1 in June.
Any figure above 50 suggests expansion.
The latest data indicated the strongest growth in Scottish private sector output for 33 months. It also extended the current trend of expansion to eight months, the longest sequence since 2014. Meanwhile, job creation was at a 31-month high, signalling an expansion in the Scottish private sector workforce for the second month running.
Fraser Sime, regional director at Bank of Scotland Commercial Banking, said last month’s results are a positive sign and show the private sector is on the up, in part down to a “subdued currency”.
“July’s survey results signalled the Scottish private sector moving up a gear, as the PMI posted its strongest result in 33 months,”
Sime said.
“This good news was fuelled by the service sector returning to meaningful growth, alongside a faster increase in manufacturing output.
“Job creation remained positive for the second month running, with July marking the fastest expansion in employment in more than two-and-a-half years.
“Employment growth was consistent across the manufacturing and service sectors.
“Input price inflation remained strong in the latest survey, with many firms citing wage inflation and the exchange rate. That said, the positive effects of a subdued currency could be seen in the growth of manufacturing exports in July.”
The latest significant rise in Scottish private-sector output follows a slight increase reported at the start of last month.
That survey, based on data from June, also showed growth in the service sector remained unchanged since May while manufacturing expanded at a slower rate. It further recorded that input and output price inflation eased slightly in the same month, though input inflation remained high.
The PMI data is the result of monthly surveys of carefully selected companies which provide an advance indication of what is really happening in the private sector economy by tracking variables such as output, new orders, employment and prices across both the manufacturing and service sectors.
Its panel is selected to reflect accurately the true structure of the Scottish economy and to provide an accurate picture of business conditions in the region.
The Scotland survey forms part of a series of regional surveys and is derived from the highly regarded national PMI survey.
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