Scottish growth remains solid
However, with new business increasing only marginally for the second consecutive month, job creation stalled. Meanwhile, cost pressures eased further, in part leading to the weakest rise in output prices so far this year.
Private sector output expanded in June for the sixth month in succession. With growth of activity picking up in both the services and manufacturing sectors since May, the headline seasonally adjusted Bank of Scotland PMI climbed to 53.3 from 52.2 in May, and was also above the long-run series average.
Despite reporting the first fall in new business for six months, Scottish service providers continued to expand activity solidly and at a slightly faster pace than their goods-producing counterparts. Growth of output in the manufacturing sector was only moderate, but above the long-run series average nonetheless. A marginal rise in new orders in manufacturing offset the fall in new business reported by the service sector.
Lacklustre demand resulted in only a marginal rise in employment in June. Furthermore, Scotland saw the slowest rate of job creation of all surveyed UK regions. Nevertheless, employment has now been rising for five months in a row.
Donald MacRae, chief economist at Bank of Scotland, said: “June saw the sixth consecutive month of growth this year in the private sector of the Scottish economy with growth in both the manufacturing and services sectors. However, marginal growth in new business and job creation suggest business is going through a “soft patch” with subdued growth in the second quarter of this year decelerating below that of quarter one.”