There was a further mild expansion of Scottish private sector activity in November, according to the the Bank of Scotland’s latest PMI Index.

Output levels were often increased through work on backlogs, however, as new business received fell for the third month running. Despite less new work, firms created jobs and, reflecting elevated cost pressures, raised tariffs marginally on the month.

Output in Scotland continued to expand at a modest pace in November, signalled by the Bank of Scotland PMI posting 51.1, up slightly from October’s mark of 51.0. This latest monthly increase in private sector activity extended the current spell of growth to 11 months, with higher output registered by both manufacturers and services providers.

Output growth was maintained despite a further (albeit modest) decrease in new business received in November. The drop in incoming new work was underpinned by declines in domestic and international demand for Scotland’s manufactured goods, with a modest rise in service sector business wins softening the overall contraction in new work.

Employment at firms operating in the Scottish private sector increased for the first time in four months in November. Additional jobs were created at both goods producers and service providers, with the former seeing the slightly faster rise in staff levels. This contrasted with a solid fall in employment across the UK as a whole.

In line with the opposing trends in output and new business in November, backlogs of work were reduced markedly. Moreover, outstanding business was cleared at a sharper rate than the historical series average.

Latest data indicated that cost pressures remained strong in November. Although weaker than earlier in the year, input price inflation overall remained well in excess of respective long-run series averages for both sectors. A number of inputs were reported as up in price since October, with survey respondents frequently mentioning energy and food in particular.

Manufacturers passed on a proportion of higher costs to clients in November, as factory gate prices increased solidly. However, with service providers cutting tariffs for a third straight month, output price inflation overall was only modest.

Donald MacRae, chief economist at Bank of Scotland, said: “November’s PMI was positive for the 11th month of this year suggesting the private sector of the Scottish economy continues to grow across manufacturing and services. Both new orders and new export orders fell in the month highlighting the challenge of maintaining growth in the face of the global slowdown.