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Scottish private sector growth hits two-year high in May



The Royal Bank of Scotland Business Activity Index scored 55.2 in May, up from 53.8 in April, signalling that private sector activity expanded for the fifth month running – and at the strongest pace in two years.

Supporting growth in activity was a sustained upturn in inflows of new work, although underlying data again showed that growth across Scotland’s private sector was achieved on the back of improving demand for services, which also helped mask the downturn observed in manufacturing.

As a result, jobs growth and backlog accumulation was limited to service firms. In terms of prices, pressures eased in May after picking up notably in April.

Scottish businesses registered a fourth successive monthly rise in inflows of new work in May. The respective seasonally adjusted index ticked up to a three-month high and was broadly in line with the UK-wide average.

The upturn was again centred at service firms, where a quicker intake of new business helped offset a deepening downturn at manufacturers. Surveyed service providers noted that better marketing strategies, new client wins and increased customer activity supported the latest uptick.

Businesses in Scotland remained optimistic towards growth prospects in the coming year in May. In fact, the degree of confidence strengthened on the month, with respondents citing plans for digitalisation and marketing, and hopes of improving demand conditions.

However, underlying data again highlighted that positive sentiment was largely driven by the service sector.

Despite the uptick in confidence, firms in Scotland were the least optimistic of the 12 monitored UK regions and nations for the second consecutive month.

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