Royal Bank of Scotland PMI report for September 2022

A summary of this month’s Royal Bank of Scotland Purchasing Managers’ Index report. In September, business activity fell for the second month running.

Key findings

  • Accelerated contraction in new work
  • Sentiment weakened further
  • Inflation remained elevated but softened


The seasonally adjusted headline Royal Bank of Scotland Business Activity Index – a measure of combined manufacturing and service sector output – changed little, going from 47.8 in August to 48.0 in September, signalling a second consecutive month of contraction. A high inflationary environment drove the latest decline in business activity and new orders, with the rate of contraction for the latter gaining momentum.

The challenging conditions meant that the degree of confidence further weakened during September. The latest reading registered a 28-month low, suggesting subdued performance as we progress into the final quarter of the year.

New business received at Scottish private sector companies contracted for the third month running during September. The rate of reduction quickened on the month and was solid overall. Inflationary pressures and the cost-of-living crisis were primarily linked to the latest downturn.

At the sectoral level, manufacturing firms reported the softest decline in factory orders in three months, while services providers reported their first contraction since March 2021.

Amid soaring prices and recession fears, overall activity expectations weakened for the second consecutive month. Business confidence hit a 28-month low, posting below the average recorded over the series history and much weaker than the UK-wide average.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “Business activity and new orders continued to decrease across the Scottish private sector during September, thereby stretching the current runs of contraction to two and three months respectively. The squeeze on customer disposable incomes amid a high inflation environment underpinned the latest downturn in output and new business.

“Despite falling business requirements, firms raised employment for the 18th successive month, albeit at a moderate pace. The combination of a drop in new work and expanding workforces allowed firms to work through their backlogs.

“The post-pandemic boom is clearly at an end, as the ongoing cost-of-living crisis plays an increasingly important role. Moreover, the 12-month outlook continues to weaken.”

Download the Scotland PMI Report September 2022 (PDF, 250KB)

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