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Scottish private sector growth weakens as Omicron concerns strike

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Scotland enjoyed another upturn in private sector business activity in the final month of 2021, according to Royal Bank of Scotland (RBS).

Announcing its latest Purchasing Managers’ Index (PMI) figures, RBS said its measure of combined manufacturing and service sector output for December came in at 52.7.

Any reading above 50 on the PMI business activity index signifies growth, compared with the previous month.

10 months of growth

Last month’s result extends the sequence of growth in the index to 10 months.

But it was also the weakest performance since the readings turned positive early last year and down sharply from November’s 55.9.

Services saw a slower rate of expansion last month, while factory production declined.

Growth of new work “eased noticeably”, with inflows of new business rising only mildly overall, RBS said.

‘Sustained confidence’

Inflationary pressures remained “elevated”, but the rates of both cost and charge increases slowed from November’s peaks, the bank added.

December’s data points to “sustained confidence at Scottish companies with regards to activity over the coming 12 months,” RBS said.

And the bank – part of NatWest Group – attributed firms’ optimism “through anecdotal evidence” to hopes that Brexit and Covid-related issues will diminish and demand conditions improve.

Sentiment “moderated slightly” from November but remained historically strong, RBS said.

Malcolm Buchanan, RBS.

RBS Scotland board chairman Malcolm Buchanan said: “Scotland’s private sector grew at the weakest rate for 10 months as Omicron concerns weighed on client demand and supply issues continued to hinder companies, particularly in the manufacturing sector.

“Infl

Sebastian Burnside, RBS chief economist.

Sebastian Burnside, chief economist, RBS,  added: “The resurgence of the pandemic in December put the brakes on the UK’s economic recovery, with each nation and region feeling the effects as people changed their behaviour in response to rising cases.

“Despite the similarities to previous waves, business activity levels seem to have been more resilient this time – due in part to comparatively lighter restrictions.”

For the ninth time in as many months, Scottish private sector companies recorded an increase in employment during December.

RBS said the rate of job creation was strong but the slowest since last April.


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