August’s Scottish PMI survey from Bank of Scotland showed latest increases in business activity and new work were both survey records, while employment rose at its fastest rate in more than six years.
There were no signs of inflationary pressures building, however, with input price inflation unchanged on the month and output charges rising at a slower rate.
Registering at a survey-record high of 58.3, up from July’s reading of 56.7, the Bank of Scotland PMI – a composite indicator designed to gauge month-on-month changes in combined manufacturing and services output – showed a sharp and accelerated increase in business activity. Services firms led the upturn, which extended to an eleventh straight month in August. Nevertheless, the pace of growth north of the border was still below the UK-wide average.
August data also showed a fresh survey-record increase in new business, with the rate of growth having accelerated fractionally since the preceding survey period. Increased marketing efforts and improved market confidence were the key factors that drove up the level of new work, according to panel member reports. Concurrently, Scottish manufacturers recorded the most marked rise in new export orders since May 2012.
Scotland’s jobs market continued to benefit from the strong performance in the private sector economy during August, with employment rising for the ninth consecutive month and to the greatest extent since June 2007. In fact, only the West Midlands recorded a more marked increase in staffing numbers than Scotland during the month.
Despite this additional staffing capacity, August saw a further accumulation of outstanding business. That said, the increase was the weakest in the current three-month sequence of rising backlogs.
The rate of input price inflation in Scotland’s private sector economy was unchanged for a second straight month in August, remaining below the long-run survey average but faster than across the UK as a whole. The main contributory factor to cost inflation was higher fuel prices, according to anecdotal evidence.
Output prices meanwhile rose only marginally on average during August amid strong competitive pressures, with the rate of increase the slowest since March.
Donald MacRae, chief economist at Bank of Scotland, said: “August’s PMI showed the economic recovery continuing in Scotland. The latest month’s results set two records for the survey showing a sharp increase in business activity and new work accompanied by a strong rise in employment.
“Particularly welcome is the rise in new export orders to the highest level since May of last year. The pace of the economic recovery in Scotland is clearly quickening but would be further enhanced by firms increasing investment.”
