SCOTLAND experienced the steepest decline in private-sector output of any of the 12 nations and regions of the UK in June, a survey has revealed, with its relatively slower pace of reopening of its economy cited as a factor.

And companies in Scotland, and across the UK, continued to shed staff at a rapid pace last month amid the Covid-19 coronavirus crisis. However, the pace of decline in combined manufacturing and services sector output north of the Border, as measured by the purchasing managers’ index (PMI) survey published today by Royal Bank of Scotland, nevertheless eased significantly. And confidence among companies about the prospects for increased activity on a 12-month horizon also improved.

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The business activity index for Scotland’s private-sector economy, which measures manufacturing and services output, rose to 37.1 in June from 21.1 on a seasonally adjusted basis to signal a still-steep decline but a less-precipitous drop than in May. The level of 50 is deemed to separate expansion from contraction.

Scotland became the worst-performing of the UK nations and regions in June as its pace of decline exceeded that in Northern Ireland, which had in May recorded the sharpest fall in business activity.

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Only the East Midlands and West Midlands clawed their way back into expansionary territory in June, and their rate of growth was only marginal. All other parts of the UK saw a much slower rate of decline in June than in May.

Although the rate of job-shedding in Scotland remained marked in June, it was the slowest in three months.

Analysing the findings for the 12 nations and regions of the UK, Royal Bank chief economist Sebastian Burnside said: “There were positive signs for all areas of the UK in June, as the PMI data for every region improved further from the historic lows seen in April. In most cases, downturns in activity eased markedly and local economies across the UK moved closer towards stabilisation. However, we continued to see a degree of variation in regional performance. It was across the Midlands where the data showed the most positive trends in business activity...

“At the other end of the scale, Scotland, with its relatively slower pace of reopening, was furthest behind on its path to recovery.”

He cited a “sustained decline in employment” as a “common theme” across all areas of the UK.

He said: “Rates of staff-shedding have continued to moderate in all areas, but with businesses still generally operating well below capacity, we’ve seen another round of marked job cuts across the board. With the [UK Government] furlough scheme set to be wound down over the coming months, the outlook for the labour market is clouded in uncertainty.”

Scottish companies recorded a fourth consecutive monthly decline in new orders in June.

Commenting on the employment picture, Royal Bank said: “Private-sector firms in Scotland continued to cut workforces at a marked rate in June, amid reports of further redundancies and lay-offs as a result of the coronavirus pandemic, alongside frequent mentions of the Government furlough scheme.”

Referring to Scottish firms’ improved confidence, it declared: “The level of positive sentiment improved notably, with anecdotal evidence linking confidence to looser lockdown restrictions and hopes of an economic recovery once the pandemic is under control. Sentiment remained slightly subdued in the context of historical data, however.”