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Business activity in Scotland's private sector decline substantially in May

Christian Fernsby ▼ | June 9, 2020
According to the latest Royal Bank of Scotland PMI, business activity in Scotland's private sector continued to decline substantially in May, as lockdown restrictions continued to disrupt the economy.
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The seasonally adjusted headline Royal Bank of Scotland Business Activity Index posted 21.1 in May, rising from April's nadir of 10.7 but still indicative of a rapid contraction in private sector activity.

Topics: Scotland

The volume of new work received by private sector firms in Scotland continued to plummet in May, with anecdotal evidence linking the fall to temporary business closures and weak client demand amid continued lockdown restrictions as a result of the coronavirus pandemic.

The pace of contraction was slower than in April, but still the second-fastest since data collection began in January 1998.

At the sector level, the drop in order book volumes was again sharper in services, although both manufacturers and service providers recorded a softer decline than in April.

Private sector firms in Scotland signalled renewed optimism with regards to activity over the year ahead in May.

The Future Output Index posted above the 50.0 nochange mark for the first time since February, with panellists linking optimism to looser lockdown restrictions and hopes of an economic recovery.

That said, sentiment remained among the lowest on record.

Across the 12 monitored UK areas, only Northern Ireland registered a weaker outlook than Scotland.

Private sector firms in Scotland reduced workforce numbers again in May, extending the current sequence of job cuts to four months.

Panellists reported that weak client demand had led them to reduce staffing levels, although some mentioned the use of government furlough schemes.

The rate of job shedding was the second-quickest on record, despite easing from April.