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RBS report: Scottish business output hits nine-month high

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A strong performance by services firms lifted Scottish private sector output in March to its highest level for nine months, according to a report.

A sharp upturn in hospitality and other services offset a slight contraction in manufacturing output, which fell for the third time in four months.

The RBS survey of purchasing managers also indicated continued growth in workforces across the private sector.

It suggested activity was supported in part by the ongoing pandemic recovery.

However, supply bottlenecks, material scarcity and rising energy and fuel prices contributed to record increases in both input costs and output prices.

Survey respondents also cited the effects of Russia's invasion of Ukraine.

The Royal Bank of Scotland Business Activity Index posted 58.4 in March, rising from February's 55.5. Any figure above 50 suggests expansion.

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The report suggested there was a slight contraction in manufacturing output in March

Services firms signalled a further uplift in new orders last month - the sharpest in four months.

Respondents attributed that to stronger client demand and greater optimism amid the easing of pandemic restrictions.

Optimism towards the coming year remained strong in March across Scotland.

Expectations of economic growth as businesses recover from the pandemic supported the positive outlook, according to anecdotal evidence.

RBS Scotland board chairman Malcolm Buchanan said the March data revealed a continued improvement across the Scottish private sector.

He said: "Despite strong growth overall, supply-side issues and substantial inflationary pressures persisted, with the impact most noticeable across the manufacturing sector.

"However, services firms saw a record surge in costs in March amid soaring energy and fuel prices, which firms continued to pass on to clients. "

He added: "Given the current state of play with regards to inflation, the downside risks to the demand side of the economy have intensified.

"But it was encouraging to see strong business sentiment, with firms optimistic for growth opportunities if the Covid-19 recovery continues."