PMI: Scottish private sector output hit by 'feeble' demand

Scottish private sector output continued to decline last month in the face of "feeble" demand, according to a regular business survey.

The Royal Bank of Scotland's latest purchasing managers' index (PMI) found new business fell at its fastest rate for five months.

RBS said demand was stifled by economic uncertainty, the cost of living crisis and higher borrowing costs.

Its business activity index fell from 45.8 in October to 43.9 last month.

Any figure below 50 suggests contraction.

On a positive note, payroll numbers were up, extending the run of jobs growth to 20 months.

The PMI data were released as Chancellor Jeremy Hunt warned that the UK economy would get worse before it got better.

According to official figures, the economy contracted by 0.3% between August and October as soaring prices hit businesses and households.

The Bank of England recently said the UK was facing its longest downturn since records began.

RBS said its latest PMI showed that demand waned in Scotland in November amid market uncertainty and the cost of living crisis.

The bank's Scotland board chairwoman, Judith Cruickshank, said: "Adding further strain on the sector was the continued intensification of price pressures.

"After cooling over the summer, input price inflation again accelerated in the fourth and final quarter of the year.

"Additionally, rates charged by private sector firms also increased at a quicker rate during November as firms tried to recoup costs."

Ms Cruickshank added that firms were less upbeat about the future than they had been in October, as "economic challenges and feeble demand weighed on expectations."

In a separate business survey, recruitment consultancy Hays found that 94% of employers experienced skill shortages in the past 12 months.

Nearly three-quarters of respondents said they would consider hiring people without the necessary skills, while 22% reported that they had raised their training budgets to help ease the problem.

Hays Scotland director Keith Mason said the survey showed most employers in Scotland were still planning to hire staff despite the uncertain economic climate.

He added: "This is positive, but there's currently a real need for employers to look outside their usual recruitment pool to fill posts.

"They should consider hiring staff from other related sectors or professions, and work to retrain staff with potential, while boosting their training budget to upskill existing staff."