Scotland’s business output ‘rebounds’ thanks to service sector

Business in Scotland has “rebounded” in activity thanks to the service sector, according to a new report.

The latest Royal Bank of Scotland (RBS) PMI shows growth in April came despite a fall in manufacturing output.

Firms say they expect activity levels to increase over the coming year, but the degree of confidence slumped to its lowest in two-and-a-half years.

Malcolm Buchanan, chairman of the RBS Scotland Board, said: “At first glance, latest survey data for Scotland revealed an improvement in economic conditions, but upon closer inspection, we see that the upturn in April was solely driven by the service sector, as manufacturing weakness continued into Q2.

“While service activity was given a boost by a small revival in demand, manufacturing output continued to lag as order book volumes shrank, with economic uncertainty and a sluggish global goods-producing market weighing on manufacturers.”

The seasonally-adjusted headline PMI increased to 51.0 in April, from 49.6 in March, signalling a return to expansion in private sector output.

While service providers mentioned improvements in demand, manufacturers reported weakness in the global goods-producing market.

The overall rate of private sector growth in Scotland was broadly in line with that recorded for the UK as a whole.

Manufacturers and service providers both expanded employment in April.

While the rise was stronger at service providers, manufacturers posted a revival to job creation following a decline in March.

This led to the aggregate rate of employment growth strengthening to a six-month high.