- Output falls as economy enters fourth quarter
- Cost pressures ease across most sectors
- Optimism for future growth remains despite challenging conditions
The headline tracker– a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – posted below the neutral mark of 50.0 for a second straight month in October. At 49.0, the headline figure was only slightly below September’s reading of 49.2 and signalled a marginal decline in private sector activity.
Where output had fallen, survey respondents generally attributed this to squeezed client budgets, fewer new orders and uncertainty across global markets.
The pace at which new orders declined eased from September and was only modest. Additionally, input prices increased at a slower pace than that seen in the prior survey period.
Commenting on the Tracker’s findings, Judith Cruickshank, chair, Scotland Board, Royal Bank of Scotland, said:
“Scotland's private sector had a mixed start to the fourth quarter of 2025. Encouragingly, the downturn in new orders moderated in October after falling solidly in the prior month, suggesting that demand conditions moved closer to stabilising. The decline in business activity meanwhile remained mild.
“Majority of the surveyed businesses expect growth over the next 12 months with investment in new technologies and marketing now underway.
“However, a fresh decrease in employment was seen in the latest survey period - albeit marginal - indicating that many businesses adopted a more cautious approach to recruitment amid relatively sluggish economic conditions and high costs.
“Notably, cost pressures remained historically strong in October, despite the rate of inflation softening from September. Consequently, output charges increased, and at the fastest rate in five months, as businesses looked to protect their margins."
Please see the regional report in full:
Royal Bank of Scotland Regional Growth Tracker (PDF, 872KB)
