Scotland business

PMI: Output growth eases to eight-month low

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Scottish private sector output rose last month but is at its weakest pace since March, according to a report.

The latest Bank of Scotland PMI suggested there was a "mild" contraction in service sector activity in November, while manufacturing output expanded "solidly".

Weak activity growth also coincided with "a softer rise" in new business.

However, the report indicated that firms increased employment in line with greater confidence over future output.

The Scottish government highlighted the latter point as showing "the resilience of Scotland's private sector".

The PMI - which measures changes in combined manufacturing and services output each month - declined in November to 50.2, from 52.7 the previous month.

Any figure above 50 suggests expansion.

The report said companies in the service sector indicated there had been no change to incoming new orders in November.

On the other hand, manufacturing firms recorded higher demand following two successive periods of contraction.

Optimism 'edges higher'

Meanwhile, businesses remained upbeat about their future growth prospects, despite sluggish growth in output and demand.

Optimism edged higher across the private sector, with planned business expansions and new product launches cited as reasons to be positive.

Fraser Sime, regional director of Bank of Scotland Commercial Banking, said: "Output growth momentum appeared to wane across the Scottish private sector in November, as signalled by the headline PMI figure falling to an eight-month low.

"The service sector was a key contributor to this, with business activity declining for the first time since April.

"Weaker output growth coincided with broadly flat new business.

"That said, firms added to their payrolls for a sixth consecutive month in preparation of a further expansion in order-book volume."

Scottish Economy Secretary Keith Brown said the report was evidence of a resilient private sector, but issued a warning about the potential impact of Brexit.

He said: "Although indicators for output and new business in the service sector eased in November, the report showed strong growth in employment with Scotland's manufacturers turning a corner on new order intake.

"While this is encouraging, Brexit uncertainty continues to cast a shadow over the future economic outlook, threatening jobs, investment and living standards."

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