Scottish economy

Growth slows as price pressures begin to bite

Malcolm Buchanan

Malcolm Buchanan: ‘some signs of momentum’

Scotland’s private sector economy continued to expand but amid signs of slowing growth as surging energy bills, supply delays and wage inflation contributed to input prices rising at the fastest pace on record.

The NatWest/RBS monthly PMI data for November showed that although business activity levels have continued to rise, growth momentum is slowing down.

The seasonally adjusted headline Business Activity Index – a measure of combined manufacturing and service sector output – posted 55.9 last month to signal a ninth successive monthly rise in output.

However, the figure was down from the 56.3 figure seen in October, pointing to a slight loss of growth momentum.

Malcolm Buchanan, chairman of the Royal Bank of Scotland board, said overall it had been another strong performance for the Scottish private sector with business activity and new work increasing further.

“There were some signs that momentum has waned slightly, however, as growth of activity eased to the slowest since April,” he said.

“At the same time, supply issues, combined with rising energy, fuel and wage bills added further to firms’ inflationary woes. Input prices rose at a record pace, with firms increasing their charges to the greatest degree on record as a result.”

Although Buchanan said price pressures and supply delays remain a key cause for concern, they are still “yet to weigh significantly on the performance of the private sector”.

Looking ahead, Scottish private sector firms remained optimistic about activity over the next 12 months in November, with the level of sentiment ticking up to a four-month high.

Respondents cited strong client demand and hopes of a continued rebound following the loosening of pandemic restrictions.

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