Private sector growth eases in Scotland

At 54.0 in May, seasonally adjusted headline Bank of Scotland PMI – a measure of the month-on-month change in combined manufacturing and services business activity – showed a solid increase in private sector output. However, the headline index was down from April's 54.8 and it was the lowest reading since April 2013. Both manufacturers and services firms recorded slower increases in output than in April. The level of new orders placed with manufacturers increased for the 17th consecutive month. The rate of growth was solid and faster than the average over the ongoing sequence of expansion, albeit slower than in April. The amount of outstanding business at manufacturers was broadly stable during May, having decreased in each of the past nine months. Firms that reported greater amounts of work in hand generally attributed this to solid growth in new orders. However, others commented on attempts to improve productivity and having reduced backlogs of work as a means of supporting production levels. Average purchase prices faced by manufacturers increased only slightly in May, with the rate of cost inflation having eased from the solid pace recorded in the preceding survey period to the slowest since July 2012. Factory gate prices also increased at a slower rate in May, the weakest since November 2013. The degree to which manufacturing output prices increased was only modest, but slightly more marked than the concurrent increase in average input prices in the sector. Meanwhile, manufacturers recorded another marked increase in their employment levels in May. The rate of job creation was slower than April's series record, but sharp in the context historical survey data. Indeed, around twice as many good producers recorded a rise in payroll numbers as recorded a decrease.