Scotland’s private sector sees sharpest rise in output for a year, figures show

April 2024 saw Scotland’s private sector enjoy its sharpest rise in output for 12 months, according to a recent Royal Bank of Scotland (RBS) report.

The Purchasing Managers’ Index for April 2024 found that the growth in new business was heavily reliant on the service sector, where firms reported new contract wins and increased investment.

This contrasts with a sharp and deepening downturn in manufacturing because of another drop in new orders, with the two sectors now seeing one of the largest divergences in output in more than 26 years of data collection.

The report’s headline Business Activity Index shows that overall output in the service and manufacturing sectors rose from 53.6 points in March 2024 to 53.8 points in April, indicating the sharpest increase in output since April 2023, when it stood at 54.3 points.

RBS Scotland board chairwoman Judith Cruickshank said: “Scottish private sector companies signalled a solid start to the second quarter, with expansions now noted in each month of 2024.

“Activity rose at a quicker pace as growth in new business was sustained. However, as has been the case since the current expansion in activity began, growth was limited to service providers, while the manufacturing sector remained in contraction territory.

“Moreover, inflationary pressures also quickened notably, with service firms being the main reason behind the stickiness in prices and charges.”

The figures also show that staff numbers at Scotland’s private sector firms rose for their 15th straight month, mainly driven by the service sector, with Scotland seeing the second-highest rise in new jobs out of the 12 UK areas in the report.

Scottish firms also saw input costs rise at the fastest rate in eight months, likely thanks to growing salaries and increases in the prices of utilities and raw materials.

This led firms to raise output prices at the highest rate for nine months, with only north-east England seeing steeper output price rises.

The report also shows that despite falling to a five-month low, and despite being the lowest of any UK area, overall sentiment among businesses in the Scottish private sector remains positive, with firms hopeful that increased demand conditions will support future expansions in activity.