The Bank of Scotland PMI report signalled ongoing expansion of activity in the Scottish private sector economy during April. Moreover, growth in output was stronger than that recorded across the UK as a whole. The latest data continued to highlight marked growth in new orders, although job creation slowed to a nominal rate. Cost pressures remained strong, particularly in the manufacturing sector.
Growth in output was signalled by the Bank of Scotland PMI – a seasonally adjusted index monitoring activity across Scotland’s manufacturing and service industries – rising from 54.4 in March to 55.8. This marked a rate of expansion that was only marginally below February’s three-and-a-half year high. Growth was broad-based across the manufacturing and service sectors. The increase was linked by panel members to robust demand conditions.
April data signalled a fourth straight monthly rise in new order levels in the Scottish economy. Furthermore, the pace of new business growth was unchanged on March’s three-and-a-half year high. Anecdotal evidence from survey respondents indicated that improving market conditions, successful promotional campaigns and strong export sales had all contributed to the rise.
Despite registering strong growth of output and new business in April, Scottish companies raised headcounts at only a marginal pace. It was weaker than that recorded in March, and seen across the UK as a whole. Where job creation was recorded, this was linked to new business wins and attempts to raise capacity levels.
Backlogs of work in the Scottish private sector were reduced for the forty-fourth month in a row during April. Although the rise was stronger than that posted in the previous survey period, it was below that seen at the UK-wide level.
Input and output prices continued to rise across the Scottish private sector in April. Overall input prices rose at a weaker pace than recorded in March, while charge inflation picked up on the month. Panellists continued to report a wide range of inputs as having risen in price. This in turn forced firms to raise charges. Inflationary pressures were centred on the manufacturing sector, as service providers recorded a deceleration of both output and input price inflation.
Donald MacRae, Chief Economist at Bank of Scotland, said:
“It is particularly pleasing to see broad-based growth across both the services and manufacturing sectors. All three service sub-sectors experienced growth, with the strongest rise recorded in financial services, followed by business services. The travel, tourism and leisure sector also posted a mild acceleration of growth in April, but remained the weakest performer. The monthly rise in manufacturing export orders was the strongest since January, with panel members reporting strong demand from China and the US.
“However, there was only a marginal increase in employment, weaker than that recorded in March. Cost pressures also remained high, especially in the manufacturing sector.”
Source : Bank of Scotland Press Release
