A £160,000 fund to help local charities and good causes supporting communities affected by the cost of living has been announced by the Royal Bank of Scotland.
Royal Bank of Scotland’s frontline colleagues in local branches and offices will be nominating good causes that they have chosen from their communities, to save charities from finding time to nominate themselves, or individuals on their behalf
The fund is part of a £1 million fund announced by the NatWest Group, which will be distributed by the bank’s boards across the UK, and forms part of a wider £5.7 million commitment to provide cost of living support across the country through partner organisations including the Federation of Small Business, the Trussell Trust, and Responsible Finance.
Over the last year, NatWest Group has provided £40 million cost of living support to its personal customers and community partners and this latest fund reaffirms its commitment to help people, families, and businesses with the rising cost of living.
Judith Cruickshank, Scotland Chair, Royal Bank of Scotland, said: “This local funding is a real opportunity for us to tailor the support we provide to Scottish charities and organisations who are delivering vital support to our communities.
“Our colleagues across the country will be shaping how the money is donated, nominating the good causes that are making a difference in their towns and villages.”
Raghu Narula, NatWest Group’s Managing Director of Customer Engagement & Distribution, said: “We are a bank driven by our purpose and values and right now that is to help our colleagues, customers and the communities they live in through the challenges faced with cost of living.
“The funding we are providing directly to our boards across the UK means that we are targeting support on a local level where it can have maximum impact.”
February sees renewed downturn in permanent placements
Permanent staff appointments fall for fourth time in five months
Pay pressures ease
Steep downturn in candidate availability
The latest data from the Royal Bank of Scotland Report on Jobs survey showed that recruitment consultancies saw a notable drop in the number of people placed in permanent roles during February amid ongoing market uncertainty and hesitancy to commit to new hires.
The seasonally adjusted Permanent Placements Index slipped from 54.7 in January to 42.1, signalling a renewed contraction in permanent staff hires. Meanwhile, the downturn in temp billings accelerated, with the pace of decrease the fastest in the current five-month period of reduction.
At the same time, the supply of both permanent and temporary staff shrank rapidly amid tight labour market conditions and skills shortages. Recruiters also commented that workers were increasingly hesitant to seek out or switch roles due to an uncertain economic climate.
Despite ongoing labour shortages, February data pointed to a notable cooling in the rates of both starting salary and temp wage inflation.
Renewed contraction in permanent placements
After posting in expansion territory in January, the seasonally adjusted Permanent Placements Index fell back below the neutral 50.0 level during the latest survey period, indicating a fall in permanent staff appointments for the fourth time in the last five months. Moreover, the rate of reduction was sharp overall and stronger than that seen for the UK as a whole. Recruiters often linked the decline to delayed hiring decisions and greater market uncertainty.
Recruitment consultancies in Scotland recorded a reduction in temp billings in February, thereby stretching the current sequence of decrease to five consecutive months. The overall pace of contraction accelerated to one that was the most marked since June 2020. The fall also contrasted with a mild upturn in billings across the UK as a whole. According to panellists, a slowdown in market conditions had impacted clients’ appetite to take on short-term hires.
Availability of permanent staff falls rapidly
February data highlighted a quicker reduction in permanent staff availability across Scotland. The rate of decrease was rapid overall and quicker than the series average. Surveyed recruiters often cited skills shortages and a tight labour market when explaining the latest drop in supply.
The decline in permanent candidate numbers across Scotland outstripped that recorded for the UK as a whole.
As has been the case in each month over the last two years, temporary staff availability declined across Scotland in February. The pace of contraction was quicker than the UK-wide trend and historically sharp, with anecdotal evidence often linking the fall to a generally low unemployment rate and reluctance amongst workers to switch roles. That said, the respective seasonally adjusted index ticked-up for a second month running to a 22-month high.
Softest upturn in starting salaries for four months
Salaries awarded to newly-recruited staff rose across Scotland in February, thereby extending the current upward trend observed since December 2020. Tight labour market conditions and skill shortages continued to drive pay higher as firms competed to secure talent, according to recruiters. However, the rate of salary inflation eased further from December, signalling the joint-softest upturn in 20 months.
Nevertheless, the rate of pay growth in Scotland outstripped that seen across the UK as a whole for the fifth successive month.
After registering the second-fastest increase in the survey’s history in January, temp wage inflation slowed notably in the latest survey period. Moreover, the rate of growth was the softest seen since April 2021. While persistent candidate shortages reportedly drove up pay, recruiters mentioned that the current economic climate limited the upturn.
The rate of wage inflation across Scotland was also weaker than the UK-wide trend.
Demand for permanent staff expands at softest rate for two years
Permanent job openings grew solidly across Scotland in February. However, the latest upturn was the softest seen for two years and below the historical average.
Of the eight monitored sectors, the strongest upturn in permanent staff demand was seen for Nursing/Medical/Care, with IT & Computing placing second.
Temp vacancies across Scotland fell for the second month running in February. The pace of contraction quickened from January and was marked. The decrease noted in Scotland contrasted with a further expansion in temp job openings at the UK level.
Blue Collar roles led the decline, followed by Engineering & Construction.
Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “The renewed expansion in permanent placements during January did not carry through to February, as the latest survey data from recruiters signalled a fresh reduction in permanent new hires.
“Furthermore, the contraction in temporary billings persisted, indicating a steep fall in short-term staff recruitment. The downturn in hiring activity was often linked to uncertainty around the outlook and hesitancy among clients to commit to new staff. At the same time, ongoing skills shortages made it difficult to acquire candidates for those that did want to fill roles.
“Vacancy data highlighted a relatively subdued increase in permanent roles, while temp staff demand fell for the second month running, which helped bring down rates of inflation for starting pay. Growth in permanent starters’ salaries was weaker than the trend seen over the past two years, while hourly rates of pay rose at the slowest pace since April 2021.”
Private sector activity falls at a quickened pace in January
Downturn in new orders extends to seventh month
Marked drop in service sector new business
The Scottish private sector reported a further fall in total activity during January according to the latest Royal Bank of Scotland PMI® data.
The Business Activity Index – a measure of combined manufacturing and service sector output – fell from December’s five-month high of 48.3 to 47.1, signalling a quickened contraction in private sector output, and extended the current run of contraction to six consecutive months.
The rising cost of living, supply chain disruptions and a slowdown in the housing market all contributed towards the latest downturn in activity.
At the sector level, January data revealed that service firms led the decline, registering faster rates of reduction in both business activity and new orders compared to their manufacturing counterparts.
New business received across the Scottish private sector posted a further contraction in January. Moreover, the pace of decrease quickened from December’s three month low, signalling a sharp reduction in new work.
The downturn was led by a faster fall in new business received at service providers, while goods producers reported the softest decline in eight months. A slow housing market, transport strikes and squeezed disposable incomes were all in part blamed for the drop in new orders.
Of the 12 monitored UK regions, Scotland registered the sharpest pace of contraction in incoming new business.
After weakening for the second month running, business expectations across Scotland improved during January and printed a six-month high. Optimism largely stemmed from anticipation of new projects and increased activity. That said, the latest reading continued to post below the survey average as worries over the war in Ukraine, energy crisis, slowdown in the real estate sector and the cost-of-living crisis weighed on growth expectations.
Additionally, business sentiment across Scotland registered the third-weakest in the UK, ahead of Northern Ireland and the North East of England.
For the second month running, workforce numbers contracted across the Scottish private sector in January. The rate of job shedding was modest overall and only fractionally quicker than that seen in December. Where a drop in employment was noted, firms cited resignations, redundancies and retirements.
The drop in workforce numbers across Scotland contrasted with the no change seen at the UK-level.
The levels of unfinished work fell during January across Scotland’s private sector, thereby extending the current trend seen since last June. Moreover, the respective seasonally adjusted index ticked down from December’s four-month high, signalling the fastest rate of depletion in the aforementioned sequence. According to anecdotal evidence, lower orders allowed firms to work through previous contracts.
The rate of backlog depletion across Scotland was the fastest of all the 12 monitored UK regions.
Firms across Scotland’s private sector recorded a sharp rise in prices during January, thereby stretching the current run of inflation to 32 months. While the rate of incline measured the softest since May 2021, the latest upturn was still marked and historically elevated. According to anecdotal evidence, the incline in input costs was linked to higher prices for raw material, energy and transport, inflation and higher wages.
The pace of input price inflation across Scotland was the second-softest among the UK regions, behind the North West of England.
Private sector firms across Scotland raised their charges for goods and services for the twenty-seventh month running in January. Though the pace of charge inflation slowed to a three-month low, it remained stronger in context of survey data. The rise in charges reflected increasing cost pressures.
Adjusted for seasonality, the Prices Charged Index for Scotland posted below the UK-wide figure.
Source: Royal Bank of Scotland, S&P Global
Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “The start of the year revealed that the downturn in Scottish private sector activity that began last August was extended into 2023.
“Moreover, the latest decline in private sector activity accelerated. It seems unlikely that the sector will bounce back anytime soon as services firms were severely impacted by the depressed demand conditions and the current economic climate.
“The step back in client activity has also resulted in firms trimming their workforce numbers for the second month running. Alongside an ongoing drop in the level of unfinished work, a further reduction in payroll numbers can be expected.
“However, the latest figures indicate that perhaps the worst of inflation has passed. Nonetheless, the current rates of input price and output charge inflation are still elevated and can be detrimental to the health of the Scottish private sector.”
Royal Bank of Scotland transfers the ground behind Dundas House in the final step before work begins on site
City’s first new concert hall in over 100 years will complete James Craig’s plans for Edinburgh’s iconic New Town
IMPACT Scotland and Royal Bank of Scotland today marked the transfer of the land behind the Royal Bank of Scotland’s iconic Dundas House, clearing the final step to allow work to begin preparing the New Town site for the construction of Dunard Centre which will begin later in 2023.
The music venue, which was given the green light by Edinburgh’s planning authorities in November 2021 is set transform the city’s cultural offering with the construction of its first purpose built concert hall in over 100 years.
Alison Rose, Chief Executive of the NatWest Group, of which the Royal Bank of Scotland is part,visited the site with Gavin Reid, Co-Chair of IMPACT Scotland and Chief Executive of the Scottish Chamber Orchestra, to mark the moment the site was handed over.
Alison Rose said: “Edinburgh is a global capital and world stage for international arts, culture and music. The Dunard Centre will provide further space to continue that tradition and offer further opportunity for more musicians and artists to develop and create.
“This project is a great example of what can be achieved with close collaboration across the city’s public and private sectors. Royal Bank of Scotland is delighted to play a part in helping bring this project to life.”
Gavin Reid said: “Together, we are building a bold and brilliant venue which is an expression of faith in our city, our country and our future. The Dunard Centre will be a place where musicians and audiences come together to create and share extraordinary experiences.
“Through this final design stage we are enjoying the challenge of ensuring excellence in every surface, corridor, seat and handrail. Every detail of the building will be finely tuned to make sure that concert going is an inspirational and exhilarating experience.”
RBS as per order of itinerary , Copyright photo Paul Chappells
A specialist team led by award winning David Chipperfield Architects and Nagata Acoustics has designed the Dunard Centre to rival any in the world for design, intimacy and clarity of sound.
With seating for 1000 people, the venue will be a transformational new home for Scottish Chamber Orchestra, an iconic new venue for Edinburgh International Festival and a gift to music lovers and performers of all genres.
It is expected that all clearance work will complete later in 2023 and that work will begin on the new concert hall soon after.
Dunard Centre is being funded through substantial philanthropic donations, including the visionary support of Dunard Fund, and underpinned by £25 million support from the Scottish and UK governments and the City of Edinburgh Council, as part of the City Region Deal.
Royal Bank of Scotland is supporting the project by providing a long-term lease for the land which sits directly behind Dundas House on St Andrew Square. A campaign is well underway to secure the remaining funds required before construction begins later in 2023.
Recruitment activity falls for the third month running
Growth of demand for labour softens during December
Starting salaries rise at quickest pace sinceJune
According to the latest Royal Bank of Scotland Report on Jobs survey, Scottish recruiters reported a decline in permanent placements during December. The rate of contraction eased considerably over the month, however, with the respective index climbing from 40.6 in November to 46.8 in December.
Nevertheless, placements fell for the third month running overall, as recession fears and market uncertainty dampened recruitment activity. Temp billings likewise fell for the third successive month. Growth of demand for labour continued to soften during the final month of the year.
Permanent and temp vacancies expanded at the weakest rates in 22 and 27 months, respectively. Nonetheless, in efforts to attract and secure candidates amid ongoing reports of labour shortages, firms across Scotland continued to raise starting salaries and temp wages sharply.
Softer reduction in permanent placements
The number of permanent staff appointments across Scotland fell in December, thereby extending the current run of contraction to three months. The downturn eased from November’s 29-month record, but was nonetheless solid overall. According to panellists, reduced market confidence and the cost of living crisis weighed on recruitment.
Though strong, the reduction in permanent placements across Scotland was softer than the UK-wide average.
For the third month running, recruitment consultancies across Scotland reported a decrease in billings received from the employment of short-term staff during December. Adjusted for seasonality, the Temporary Billings Index ticked down from November, to signal a quicker rate of contraction, albeit one that remained mild overall. Skill shortages and difficulties sourcing candidates were in part blamed for the latest decrease.
While a further reduction in temp billings was recorded across Scotland at the end of 2022, the UK as a whole registered a modest expansion.
Marked fall in permanent labour supply in December
The availability of candidates to fill permanent positions across Scotland worsened for the twenty-third consecutive month during December. Although easing from November, the rate of decline remained marked overall and among the fastest on record. Acute skill and candidate shortages limited the supply of workers, according to recruiters. Furthermore, the cost of living crisis, recession fears and greater market uncertainty also restrained labour movement.
The pace of reduction in permanent candidate availability across Scotland outstripped the UK-wide average.
As has been the case in each of the last 22 months, Scottish recruiters reported a fall in temp candidate numbers during December. The rate of reduction gathered pace for the third month running and was the sharpest since June. The latest reduction in temp staff availability was attributed to a slowdown in market conditions, Brexit and a general scarcity of labour.
Starting salaries rise rapidly in December
December data revealed another sharp rise in starting salaries awarded to permanent joiners during December. Notably, the pace of growth continued to quicken from October’s 16-month low, with the latest upturn the steepest since June and above the historical average. According to anecdotal evidence, labour and skill scarcity continued drive up salaries.
Starting salaries across Scotland rose at a much faster pace than that recorded at the UK level.
Pay rates for temp staff across Scotland rose during December, thereby stretching the current run of wage inflation to 25 months. While the rate of growth eased slightly from November, it remained stronger than the survey average and signalled a sharp rise in hourly wages overall. Recruiters indicated that companies raised their pay rates as part of efforts to attract staff amid ongoing labour shortages.
As was the case with permanent starting salaries, temp wages across Scotland grew at a much stronger rate than that seen across the UK as a whole.
Growth of demand for permanent staff eases in December
Growth of demand for permanent staff moderated for the eighth successive month during December. Though strong, the latest upturn was the softest seen since the current run of expansion began in February 2021. Moreover, the rate of increase was weaker than the survey average.
The strongest upturns in demand for permanent staff were seen across the Nursing/Medical/Care and IT & Computing sectors.
Scottish recruiters reported a marked slowdown in growth of demand for temp staff during December. Notably, the respective seasonally adjusted index fell to its lowest level in 27 months and pointed to only a marginal rate of growth.
Of the eight monitored sectors, IT & Computing reported the strongest increase in demand, with Nursing/Medical/Care ranking second.
Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “The final Report on Jobs survey of the year concluded with a further downturn in hiring activity across Scotland, with recruiters noting a third monthly contraction in both permanent placements and temp billings.
“According to panel members, greater market uncertainty and fears over a recession led clients to maintain a cautious approach to staff hiring at the end of 2022. Demand for labour also softened, adding to the likelihood that challenges across the labour market will persist as we enter the new year.
“Nonetheless, with difficulties sourcing suitable candidates, firms continued to raise rates of starting pay. Thus, the data overall suggest that firms are becoming more selective and guarded with their hiring decisions, but willing to offer competitive pay to candidates to secure them.”
Business Activity Index falls further below the neutral 50.0 threshold
Sharper decline in new orders
Business sentiment weakens in November
According to the latest Royal Bank of Scotland PMI® data, the Scottish private sector reported a deepening contraction in private sector output during November.
The Business Activity Index ticked down from 45.8 in October to 43.9 in November, signalling that fastest decrease in the current series of reduction that began in August. Hesitancy among clients amid economic uncertainty, the cost of living crisis and higher borrowing costs, stifled demand. Consequently, inflows of incoming new business continued to decline in November.
Moreover, the pace of reduction steepened in November and extended the current run of contraction to five months. Looking ahead, expectations regarding the 12-month activity outlook across Scotland weakened from October’s three-month high and was subdued in the context of historical data.
New business placed across Scotland’s private sector decreased sharply in November. The downturn quickened from the preceding survey period to the fastest overall in the current five-month run of contraction. An array of reasons were linked to the latest reduction in sales, including lower market activity, the cost of living crises, rising borrowing costs, and growing economic uncertainty resulting to delayed-decision making.
All of the 12 monitored UK regions reported a decline in inflows of new business, with Scotland registering the third-fastest downturn behind Northern Ireland and the East Midlands.
Latest survey data signalled muted expectations for the 12-month activity outlook across Scotland. Business confidence weakened from October’s three-month high, posting well below the historical average. While there were hopes of growth in sales in the coming year, the ongoing downturn in activity weighed on sentiment.
Expectations towards future activity across Scotland were noticeably less upbeat than those recorded at the UK level.
Payroll numbers across Scotland’s private sector firms increased in November, extending the run of job growth to 20 months. The pace of job creation quickened slightly from October amid renewed growth in employment across the manufacturing sector. However, reports of resignations, rising uncertainty, reduced demand and job cuts resulted in only a marginal overall upturn in hiring activity.
The latest uptick in employment across Scotland printed broadly in line with that at the UK level.
For the sixth time in as many months, levels of outstanding business fell across Scotland during November. The rate of depletion was broadly unchanged from October, indicating a sharp decrease in work-in-hand overall. According to anecdotal evidence, completion of contracts and a drop in sales was linked to fewer backlogs.
The rate of decrease across Scotland outstripped the UK-wide average and was the second most severe after Northern Ireland.
Input prices across the Scottish private sector inclined rapidly during November, thereby extending the current run of inflation to two-and-a-half years. Adjusted for seasonality, the latest reading ticked-up to a three-month high. Firms blamed the latest increase in average cost burdens on energy prices, wages, higher shipping costs and the cost of living crisis.
However, the pace of input price inflation across Scotland was slightly slower than the UK-wide average.
Charge inflation entered its twenty-fifth month across Scotland during November. The pace of inflation further intensified from September’s recent low, signalling the fastest rise in charges in five months, but was marginally weaker than that recorded for the UK as a whole. The latest increase in charges mirrored the upturn in average costs burdens.
Source: Royal Bank of Scotland, S&P Global.
Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “The latest survey data signalled a stronger contraction across the Scottish private sector during November, as demand waned amid market uncertainty and the cost of living crisis.
“As a result, both activity and incoming new business fell as sharpest rates in the current four- and five-month sequences of reductions.
“Adding further strain on the sector was the continued intensification of price pressures. After cooling over the summer, input price inflation again accelerated in the fourth and final quarter of the year. Additionally, rates charged by private sector firms also increased at a quicker rate during November as firms tried to recoup costs.
“Overall, the penultimate month of the year pointed to confidence among private sector firms registering less upbeat than that seen in October, as economic challenges and feeble demand weighed on exceptions.”
According to the latest Royal Bank of Scotland Report on Jobs survey, hiring activity fell across Scotland again in November amid greater economic uncertainty and strong cost pressures.
For the second month running, both permanent staff hires and temp billings fell, with the former recording the quickest reduction since June 2020. While staff availability continued to deteriorate, demand for labour expanded at a softer, but still strong rate.
The ongoing imbalance of labour demand and supply led to further rises in both starting salaries and short-temp pay.
Downturn in permanent placements gathers pace
For the second successive month, permanent placements fell across Scotland in November. The rate of reduction quickened from October to the fastest since the initial phase of the pandemic in June 2020 and was sharp overall. Increased market uncertainty and candidate shortages were blamed for the latest drop in permanent staff appointments.
Permanent placements also fell across the UK as a whole for the second month in a row, albeit at a softer pace than that seen in Scotland.
November data highlighted a fall in temp billings across Scotland for the second consecutive month. Adjusted for seasonality, the respective index pointed to a slower and modest pace of decrease. According to anecdotal evidence, concerns about the outlook weighed on labour market activity.
In contrast to the trend seen for Scotland, temp billings expanded modestly at the UK level.
Supply of permanent staff falls steeply in November
As has been the case since February 2021, the supply of permanent staff across Scotland contracted during November. Furthermore, the rate of deterioration was the most severe since May and among the fastest on record. Recruiters stated that a combination of labour and skill shortages, Brexit and economic uncertainty reduced the supply of candidates.
Notably, the downturn in permanent staff supply across Scotland outstripped the UK average for the eighth month in a row.
A twenty-first successive monthly fall in temporary candidates across Scotland was recorded during November. The rate of reduction accelerated on the month, and was the sharpest since June. The decline also exceeded that seen across the UK as a whole. Recruiters blamed the fall on a stronger preference for permanent roles, candidate shortages and economic uncertainty.
Upward pressure on starting salaries intensifies in November
Latest survey data signalled a further rise in salaries awarded to permanent new joiners in Scotland for the twenty-fourth successive month in November. The rate of pay inflation ticked up from October’s 16-month low, and was rapid overall. The latest rise in salaries was attributed to competition for labour amid staff and skill shortages.
For the second month running, Scotland noted a quicker rise in starting salaries than recorded at the UK level.
Average hourly wages increased further across Scotland in November, thereby stretching the current sequence of inflation to two years. The rate of pay growth accelerated from October’s 18-month low and was sharp overall. Scottish recruiters commonly noted that acute skill and candidate shortages continued to exert upward pressure on wages.
Further slowdown in growth of demand for permanent staff in November
November data pointed to another monthly increase in the number of permanent vacancies across Scotland, extending the current run of expansion that began in February 2021. That said, while growth remained strong, the rate of increase weakened to the second-slowest in the aforementioned sequence.
Across the monitored job categories, Nursing/Medical/Care reported the quickest rise in vacancies. Executive & Professional and Hotel & Catering reported reduced demand for permanent staff.
Recruiters across Scotland signalled a twenty-sixth successive monthly rise in temporary vacancies during November. However, the rate of expansion cooled since the previous month and was the softest seen since February 2021.
IT & Computing registered the quickest upturn in short-term vacancies, followed by Accounts & Financial.
Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Following the post-pandemic hiring boom, the latest Report on Jobs survey indicates that recruitment activity lost further momentum in November amid a slowdown across the economy.
“Greater uncertainty around the outlook and candidate shortages have taken a toll on staff hiring across Scotland. Latest data indicated a notably steeper contraction in permanent placements, while temp billings fell for the second consecutive month.
“At the same time, labour scarcity resulted in strong growth in pay, with both starting salaries and hourly wages rising at sharper rates during November.
“The steeper drop in candidate availability across Scotland, which was often blamed on a generally low unemployment rate, fewer foreign workers, worries over the economic climate and cost of living crisis, is likely to add further upwards pressure on pay in the months ahead, particularly if firms want to attract and secure the skilled workers they need.”
Business Activity Index falls to 45.8 in October from 48.0 in September
Contraction in new orders quickens
Growth in employment further weakens
The contraction across Scotland’s private sector firms deepened during October, according to the latest Royal Bank of Scotland PMI® data. Adjusted for seasonality, the Business Activity Index posted below the neutral 50.0 threshold for the third month running, at 45.8, indicating a sharp decrease overall.
Inflows of new business also went into further decline, the latest downturn being the most severe in 20 months. To further add weakness across the sector, inflationary pressures reaccelerated from September’s recent low, as service providers reported quicker upturns in input costs and charges during October.
The gloomy performance resulted to the softest intake of workers in 18 months, with goods producers reporting their first reduction in employment since January 2021.
New business received at Scottish private sector firms fell sharply during October. The rate of decrease quickened from September to the fastest in the current fourth-month sequence of reduction.
Of the two sub-sectors, manufacturing firms reported the steeper downturn. Companies noted that looming recession, economic uncertainty and the cost of living crisis weighed on client activity.
The downturn in incoming new business across Scotland outpaced the UK-wide average.
Output expectations for the year ahead across private sector firms in Scotland strengthened in the three months to October. The increase in confidence was underpinned on planned expansions and investment, with firms also hopeful of future economic stability. That said, sentiment was relatively muted in context of historical data.
Business confidence across Scotland was broadly in line with that recorded for the UK as a whole.
Employment across the Scottish private sector expanded for the nineteenth month running in October. However, amid a cooldown in hiring activity at service providers, with goods producers reporting their first contraction since January 2021, the overall rate of growth ticked down to the joint-lowest in the aforementioned series.
The rate of job creation across Scotland remained softer than that seen at the UK level, which similarly also slowed in October.
October’s survey showed a sustained fall in levels of outstanding business across Scotland’s private sector. The respective seasonally adjusted index posted below the neutral 50 threshold for the fifth consecutive month, the latest reading signalling the fastest depletion in work outstanding since January 2021. As per surveyed businesses, declines in new orders allowed firms to work through previous backlogs.
The rate of contraction in Scotland was the third-fastest across the UK, ahead of Northern Ireland and Wales.
October data signalled a robust rise in input costs across Scotland’s private sector, thereby extending the run of inflation to 29 months. Adjusted for seasonality, the latest reading increased from September’s 13-month low as a result of a reacceleration in input price inflation reported at service firms. The uptick in average costs was attributed to higher wages and utilities, cost of living crisis and general inflation adding strain on costs.
Despite being severe, the pace of input price inflation was however, softer than the UK average.
In line with the upturn in average cost burdens, charge levied by Scottish private sector firms also inclined from September’s recent low at a quickened rate during October.
The rate of charge inflation across Scotland posted weaker than the UK-wide average which slowed during October.
Source: Royal Bank of Scotland, S&P Global.
Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “The Scottish private sector reported a third month of contraction during October. The downturn in activity quickened on the month, as stubbornly high inflationary pressures, the ongoing cost of living crisis and a threat of recession deterred growth. New orders received at firms also fell further.
“Employment trends across the sector indicated a slowdown in hiring activity over the recent months. The latest upturn was the joint-softest in the current 19-month sequence of expansion. At the same time, the level of outstanding business also fell at a much sharper rate. The data thus suggesting the further weakness in the labour market will not be surprising.
“As we proceed into the final quarter of the year, market conditions are set to become more challenging. The aggressive interest rate hikes, the decline in the value of sterling against the dollar and the rebound in post-COVID demand phasing out, all amidst the ongoing cost of living and energy crises, all point to an extremely difficult period for Scotland.”
Renewed downturn in permanent placements during October
Permanent placements fall amid growing economic uncertainty
Temp billings decline for first time in 26 months
Pay pressures soften, but remain strong overall
Hiring activity across Scotland fell into decline during October, with both permanent staff appointments and temporary billings contracting, according to the latest Royal Bank of Scotland Report on Jobs survey.
Permanent placements have now fallen in two of the past three months, while the downturn in temp billings was the first seen since August 2020. Moreover, the rates of contraction were strong overall amid reports of growing economic uncertainty, softening demand conditions and the deepening cost of living crisis.
October data also revealed further increases in starting salaries and temp wages. However, rates of inflation continued to ease, signalling a mild waning of pressure on pay.
Permanent staff placements fall solidly
October data highlighted a fall in permanent staff placements across Scotland. After a month of growth in September, the respective seasonally adjusted index reverted below the neutral 50.0 threshold to signal the second reduction in three months.
The rate of contraction was the fastest seen in nearly two years and solid, with recruiters often linking the fall to growing economic uncertainty and the cost of living crisis.
At the UK level, a fall in permanent staff hires was also noted, with the rate of decline similar to that seen in Scotland.
Scottish recruitment consultancies signalled a reduction in temp billings during October, thereby ending a 25-month run of expansion. The rate of contraction was the quickest seen since July 2020 during the initial wave of the pandemic and strong overall. According to panellists, the latest fall was driven by reduced activity at clients.
Across the UK as a whole, temp billings were broadly stagnant after rising in each of the prior 26 months.
Downturn in permanent staff supply fastest in three months
Recruiters across Scotland noted a twenty-first successive monthly fall in permanent candidate availability during October. The pace of decline quickened on the month and was marked overall. Panellists generally linked the latest downturn to skill shortages and increased hesitancy to seek out new roles due to rising economic uncertainty.
The pace of reduction across Scotland was more rapid than that recorded for the UK as a whole.
The supply of temp labour across Scotland fell again during October. Despite being severe overall, the rate of decline was the second-slowest in seven months (after September). Recruiters highlighted a lack of European workers and ongoing skill shortages as factors constraining supply.
As has been the case for the last seven months, the rate of contraction in temp staff availability in Scotland was sharper than that seen at the UK level.
Starting salary inflation softens further in October
Latest survey data indicated that average starting salaries for permanent staff in Scotland increased at the slowest pace since June 2021 during October. That said, the pace of wage inflation remained elevated in comparison to the historical average. According to anecdotal evidence, skill and candidate shortages continued to drive up rates of pay.
Data for the UK as a whole also signalled a softer rise in starting salaries during October. Moreover, the pace of inflation was softer than that seen for Scotland for the first time in four months.
As has been the case for the past 23 months, temp wages rose across Scotland during October. While the respective seasonally adjusted index hit an 18-month low, it signalled a sharp rise overall. Greater competition for scarce candidates was cited as a key driver of the latest increase in temp pay.
At the national level, wages also increased at a much slower rate during October. However, the rate of inflation was quicker than that registered in Scotland.
Demand for permanent staff expands at slowest pace in 20 months
Demand for permanent staff grew sharply during October, thereby extending the current period of expansion to 21 months. However, the respective seasonally adjusted index fell for the sixth month running, with the latest reading edging down to a 20-month low.
Across the monitored job categories, IT & Computing registered the steepest rate of expansion, followed by Nursing/Medical/Care.
Recruiters across Scotland noted a twenty-fifth successive monthly rise in temp staff demand during October. While the rate of growth was the weakest since February 2021, it was quicker than that seen across the UK as a whole.
At the sector level, IT & Computing saw the quickest growth in short-term vacancies, followed by Accounts & Financial.
Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Labour market conditions across Scotland deteriorated in October, as for the first time since August 2020, both permanent placements and temporary billings contracted.
“At the same time, rates of vacancy growth for both permanent and short-term staff continued to ease. Candidate and skill shortages meanwhile stretched the supply of labour thin, with recruiters also noting that increased economic uncertainty had impacted candidate numbers. Though it does seem that market imbalances are becoming less pronounced, the effect on pay remains strong.
“The data therefore suggest that growing uncertainty about the economy and the cost of living crisis are already affecting the labour market, and could weigh further on hiring decisions for the remainder of the final quarter of 2022.”
Business activity across Scotland’s private sector contracted again in September, according to the latest Royal Bank of Scotland PMI® data. The seasonally adjusted headline Royal Bank of Scotland Business Activity Index – a measure of combined manufacturing and service sector output – was little-changed from 47.8 in August at 48.0, signalling a second consecutive month of contraction.
Despite easing, 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 in Scotland’s private sector in September. Business confidence hit a 28-month low, posting below the average recorded over the series history and much weaker than the UK-wide average.
As has been the case since April 2021, employment across Scotland’s private sector increased in September. According to anecdotal evidence, successful hiring was in part linked to fresh graduates entering the workforce. While the respective seasonally adjusted index improved marginally from the that seen in August, it was the second-lowest reading in 17 months.
The pace of employment growth in Scotland was softer than the UK average.
September data revealed a reduction in backlogs of work for the fourth consecutive month at private sector companies in Scotland. The rate of depletion quickened to the fastest in 20 months. Respondents frequently mentioned the fall in backlogs reflected fewer new orders.
The rate of reduction at Scottish private sector companies was quicker than the UK-wide average which, in contrast to Scotland, softened during September.
For the twenty-eighth month running, average cost burdens rose across private sector firms in Scotland during September. The rise was largely blamed on inflationary pressures in labour market and supply chains. Despite the rate of input price inflation remaining historically high, the latest incline was the softest since August 2021 with both sectors noting slower rates of inflation.
Moreover, the pace of inflation in Scotland lagged behind that seen at the UK level, posting the second-softest of the 12 monitored regions ahead of the South West of England.
Scotland’s private sector firms raised their charges during September, thereby stretching the current run of output price inflation to 23 months. According to panellists, prices were raised primarily to offset increasing costs. That said, the rate of output price inflation was the weakest in 13 months and the softest of the 12 monitored UK regions.
Source: Royal Bank of Scotland, S&P Global.
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 eighteenth 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.”
