Scotland placed second of 12 UK nations and regions on key performance measure

And Scotland recorded the second-fastest growth in private sector employment among the 12 UK nations and regions in October, behind only Northern Ireland.

Most parts of the UK recorded declines in employment last month, according to the latest growth tracker survey from Royal Bank of Scotland published today.

Scotland’s services sector performed strongly in October, offsetting a sharp decline in manufacturing activity.

The seasonally adjusted Scotland business activity index, which measures the month-on-month change in the combined output of the manufacturing and services sectors, was 51.3 in October. This was up slightly from September’s reading of 51.2, and comfortably above the level of 50 deemed to separate expansion from contraction.

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Royal Bank said: “Growth continued to rely on the services sector, which helped to offset a significant decline in manufacturing. While services activity rose further due to reports of strengthened underlying demand trends, goods producers fell deeper into contraction territory, heavily impacted by uncertainty surrounding the Autumn Budget, recruitment challenges, and an overall subdued demand climate.”

It added: “In fact, after three consecutive months of modest growth, the Scottish private sector saw a fresh fall in new orders in October. Meanwhile, private sector firms based in Scotland noted a steep rise in expenses during October.”

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However, both the services and manufacturing sectors reported overall rises in confidence about the prospects for increased activity on a 12-month horizon.

Judith Cruickshank, who chairs Royal Bank’s Scotland board, said: “The picture for Scotland remained broadly unchanged in October. Again, growth in private sector activity was shouldered by service providers. Meanwhile, the manufacturing sector suffered heavily.

“A notable difference was a fresh decline in new business, however.”

She noted a slowdown in new business growth in October in the services sector. And this slower growth in new business in services was insufficient to offset a steep decline in incoming orders in manufacturing.

Ms Cruickshank added: “This recent drop in demand may be attributed to heightened uncertainty surrounding the Autumn Budget, which had not yet [taken place] at the time of the survey collection. Therefore, it may be premature to draw conclusions for future months.

“On a positive note, employment rose solidly again. Meanwhile, inflationary pressures, while intensifying slightly on the month, remained historically subdued. Lastly, businesses put more stock into their outlook, with confidence levels improving.”