Private sector growth in Scotland slowed in June, RBS study says

Scotland’s private sector saw growth slow last month, the latest Royal Bank of Scotland (RBS) growth tracker has revealed.

The study showed Scotland’s private sector rate of growth slowed to a five-month low, while output grew at a weaker rate across Scotland compared with the UK as a whole.

That slowdown in private sector output was accompanied by a fresh fall in new business – the first seen in five months.

Employment rose in the latest study period, but at the second-weakest rate since the current run of expansion began in February 2023.

But the bank said the tracker, based on a panel of 500 service providers and manufacturers, showed inflationary pressures continued to fall as cost burdens rose at the weakest rate in 40 months.

Projections for the year ahead outlook across Scotland remained optimistic and broadly in line with the long-run, average trend in June. Companies were hopeful demand conditions would improve in the coming months and planned to raise their advertising and investment.

RBS Scotland board chair Judith Cruickshank said: “The Scotland growth tracker signalled modest gains in private sector activity during the latest survey period.

“While the upturn lost momentum, as the service sector observed a notable cooldown in June, the ongoing downturn in the manufacturing sector showed further signs of easing as output was broadly stable, and the downturn in new orders moderated.

“Additionally, private sector companies continued to raise their staffing levels, albeit the latest uptick was fractional overall.

“Price pressures continued to abate as the year progressed, cost burdens rose at the weakest pace since February 2021, and the rate of charge inflation equalled the weakest seen over the same period. Some firms were keen to price competitively in order to generate new sales.”

Those polled attributed the downturn in new business to reduced client activity and advertising spend, as well as political uncertainty and high interest rates.

The tracker found growth in Scottish private sector employment lost momentum last month with the number of employees rising only “only fractionally” and at the second-weakest rate in 17 months. Some firms reported success in filling long-standing vacancies, but the wider economic climate and reduced client activity resulted in others lowering their staffing levels.

Don’t miss the latest headlines with our twice-daily newsletter – sign up here for free .