Manufacturers and service firms saw rates of business accelerate last month, prompting the Bank of Scotland’s monthly study of purchasing managers to hail a “rebound” in private-sector growth.
The bank’s closely-watched PMI report said business activity rose at its fastest pace in three months, with firms also upping their recruitment to help manage a step-up in work.
The improvement helped the seasonally adjusted PMI rating to a new three-month high of 55.9 during June a significant improvement on May, when the measure fell to a 13-month low of 54.0.
Bank of Scotland chief economist Donald MacRae said the result extended the current run of consistent expansion in the economy, as marked by an index score of above 50, to 21 consecutive months.
The study marked a recovery which is now “firmly embedded,” he added, with export orders levelling off following a dip over recent months.
“Growth was evident across both manufacturing and services, with business services leading the way,” Prof MacRae said.
“After four months of decline, new export orders stabilised while levels of new business rose across the economy.
“Employment growth was accompanied by rising salaries, providing further evidence of increasing business confidence.”
The bank’s analysis found stronger inflows of new work were the cornerstone for an improvement in fortunes.
Greater demand in the private sector was prompted, in part, by a bigger marketing spend, while a steadying of export orders at manufacturers formed a “relative positive” following four successive months of weakness in international markets.
But order books and work backlogs also decreased for the second month in a row, showing many companies’ continued reliance on existing orders to continue their productivity.
The study also found that employment rose strongly during June, and at its second-highest level since the survey began 16 years ago.
Input price inflation rose at its fastest rate since February, with panel members reporting incremental increases in salaries as the main factor behind the rise.
Output prices rose to protect margins, but at a slower rate than the increase in cost inflation with pressures in Scotland higher than across the UK as a whole.