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Key findings

  • NatWest Scotland Growth Tracker largely unchanged
  • New orders record fresh decline
  • Inflationary pressures increase

 

The Scotland Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered at 51.3 in October, broadly unchanged from September's reading of 51.2, indicating a tenth consecutive month of activity expansion. However, this indicated the second-weakest reading in this ongoing growth sequence. Growth continued to rely on the services sector, which helped to offset a significant decline in manufacturing. While services activity rose further due to reports of strengthened underlying demand trends, goods producers fell deeper into contraction territory, heavily impacted by uncertainty surrounding the Autumn Budget, recruitment challenges, and an overall subdued demand climate.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented:

"The picture for Scotland remained broadly unchanged in October. Again, growth in private sector activity was shouldered by service providers, meanwhile the manufacturing sector suffered heavily. A notable difference was a fresh decline in new business, however. A slowdown in new business within services was unable to offset a steep decline experienced in manufacturing. This recent drop in demand may be attributed to heightened uncertainty surrounding the Autumn Budget, which had not yet been announced at the time of the survey collection; therefore, it may be premature to draw conclusions for future months. "

On a positive note, employment rose solidly again. Meanwhile, inflationary pressures while intensifying slightly on the month, remained historically subdued. Lastly, businesses put more stock into their outlook, with confidence levels improving.

 

Please see the regional report in full:

Royal Bank of Scotland UK Regional Growth Tracker (PDF, 1,405KB)

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