Report shows private sector growth stalled last month
According to one report, August was the first time in seven months that operations in Scotland had not expanded.
Royal Bank of Scotland’s monthly Purchasing Managers’ Index (PMI) shows private sector activity failed to grow last month, marking the end of a six-month period of growth.
The Scotland Business Activity Index fell to 50.0 in August from 51.1 in July, indicating a stagnant period.
Meanwhile, new orders fell for the second straight month, at an accelerated pace as service providers joined their manufacturing businesses in the downturn.
Companies continued to see historically high increases in their cost burdens, the report said, and as a result the cost of goods and services also rose sharply.
The business climate has also fallen to an eight-month low.
Higher material, labor and energy costs meant that companies continued to struggle with rising cost burdens. In return, companies increased their fees for providing goods and services
Another setback for the industry was that service providers saw a decline in orders and manufacturing orders fell at a remarkable pace for five months in a row.
Analysts attribute this decline in new business to factors such as inflation, economic uncertainty and rising cost of living, all of which have put pressure on demand.
Still, companies continued to report employment growth for the seventh straight month and forecast growth next year.
Judith Cruickshank, chair of the Scotland board at RBS, said: “The latest PMI data for Scotland pointed to emerging weakness in the Scottish private sector, with companies signaling no change in private sector output and new orders rising amid reports of economic Uncertainty decreased slightly.” falling demand.
“Declining business demands could lead to a reduction in production unless the demand situation improves.
“In addition, higher material, labor and energy costs meant that companies continued to struggle with rising cost burdens.
“In return, companies increased their fees for providing goods and services. Finally, business confidence regarding the outlook for the year ahead remained historically subdued, weakening to an eight-month low as weak demand conditions, higher interest rates and inflation weighed on expectations.”
https://www.standard.co.uk/business/business-news/growth-in-private-sector-halted-last-month-report-shows-b1106095.html Report shows private sector growth stalled last month
