THE slowdown in the Scottish private sector economy deepened in October, according to a key survey.
Royal Bank of Scotland Company The activity index for north of the border, which covers the manufacturing and service sectors, fell from 48.0 in September to 45.8 last month on a seasonally adjusted basis. This took it much further below the 50 level believed to separate expansion from contraction.
Manufacturing suffered a bigger slowdown than services in October, the Royal Bank said.
The private sector economy north of the border has, according to the Royal Bank PMI (Purchasing Managers Index) Scotland report released today, has now experienced three consecutive months of contraction.
Earlier this month, the Bank of England predicted a two-year recession in the UK.
Judith Cruickshank, who chairs the board of Royal Bank Scotland, said: “As we enter the final quarter of the year, market conditions are expected to become more challenging. Aggressive interest rate hikes, the decline in the value of the pound against the dollar and the rebound of the post-Covid demand phase-out, all amid the current cost of living crisis and energy, all point to extremely difficult times for Scotland. .”
The pace of labor force growth in Scotland’s private sector economy slowed in October to its weakest level in the current 19-month job growth period. In services, employment growth has slowed. Meanwhile, manufacturers reported their first overall job cut since January last year.
Business confidence across Scotland was broadly in line with that recorded for the UK as a whole, the Royal Bank noted.
New orders fell for a fourth consecutive month in October, and the pace of the decline accelerated.
Ms Cruickshank said: “The Scottish private sector reported a third month of contraction in October. The slowdown in activity accelerated during the month as stubbornly high inflationary pressures, the ongoing cost of living crisis and a threat of recession deterred growth.