Key findings

• Output falls for third month running, but only fractionally
• Year-ahead outlook strengthens
• Charges rise at sharpest rate in ten month

The Scotland Growth Tracker – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – noted a third consecutive monthly decline in Scottish private sector output in February. At 49.0, down slightly from 49.6, the index indicated only a marginal decline, and masked a slight rise in services business activity. Companies continued to face challenges in obtaining new business, with inflows of new work falling for the fifth consecutive month and at the steepest rate since November 2023. Despite lower new work, the latest survey data revealed growing optimism among Scottish firms. the 12-month outlook improved to a three-month high, suggesting that firms expect the current downturn in activity to end in the coming months.

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

The downturn in activity that began at the end of last year continued in February, but remained mild. Firms reduced output slightly, in line with decreasing inflows of new work. Concerns surrounding upcoming employment costs and policy changes, as well as growing economic and geopolitical uncertainty, were blamed for the recent lacklustre performance. "As a result, companies were cautious, adopting a more careful approach to hiring and slightly cutting back on payroll numbers ahead of changes to NICs. "Looking ahead, still-elevated price pressures may pose headwinds to performance. Nonetheless, businesses recorded greater confidence for the year-ahead outlook."

Royal Bank of Scotland UK Regional Growth Tracker (PDF, 1.1MB)