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Private sector growth remains skewed towards the service sector

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Private sector growth remains skewed towards the service sector

Royal Bank of Scotland’s headline Scotland Business Activity Index has signalled a third consecutive monthly expansion in private sector output during March.

The seasonally adjusted index, which measures the month-on-month change in the combined output of the region’s manufacturing and service sectors, rose from 52.1 in February to 53.6; indicating the most pronounced expansion in 11 months.




The latest upturn across Scotland surpassed that seen for the UK as a whole, with only London and Northern Ireland recording stronger rates of growth.

However, underlying data noted a continued divergence between the two sub-sectors. While business activity rose across service providers at the sharpest pace since June 2022, the downturn in manufacturing production entered its ninth successive month and deepened since February.

Scotland’s private sector signalled a second consecutive monthly rise in new business during March. This was again driven by service firms, according to sub-sector data, while the downturn in manufacturing new orders entered its 12th successive month. Survey respondents noted that new client wins and contracts, increased marketing and the closure of competitive firms supported the latest uptick.

The rate of growth across Scotland moderated and lagged behind the UK-wide average, however.

Latest data indicated a further improvement in confidence levels at Scottish private sector companies. The respective index ticked up for the second straight month to a 13-month high. The positive year-ahead outlook was spurred by plans of increased investment and advertising, as well as hopes of improving underlying demand conditions.

Nonetheless, sentiment across Scotland was the second-weakest of all the monitored UK regions and nations, with only the north east anticipating softer growth in activity.

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