OUTPUT in the Scottish private sector increased in November but at the slowest rate since March, according to the latest figures.

Weak activity growth coincided with a smaller rise in new business. However, businesses increased employment in line with a stronger degree of confidence regarding future output.

The seasonally adjusted headline Bank of Scotland Purchasing Managers' Index (PMI), which is a

single-figure measure of the

month-on-month change in combined manufacturing and services output, declined in November to 50.2, from 52.7 in October. The pace of expansion was marginal and the weakest since March.

However, businesses remain upbeat about future growth prospects despite sluggish growth in output and demand, and added to their payrolls for a sixth consecutive month in November.

Despite this, the rate of job creation across the Scottish private sector was still modest and down slightly on previous months.

Price inflation in private sector input as a whole slowed to its lowest since September 2016. As a result of receding cost pressures, selling price rises were the lowest so far in the current 16-month run of inflation.

“Output growth momentum appeared to wane across the Scottish private sector in November, as signalled by the headline PMI figure falling to an eight-month low,” said Fraser Sime, regional director of the Bank of Scotland’s commercial banking. “The service sector was a key contributor to this, with business activity declining for the first time since April.

“Weaker output growth coincided with broadly flat new business. That said, firms added to their payrolls for a sixth consecutive month in preparation of a further expansion in order-book volume. Concurrently, business confidence over future activity increased in November."

The figures were welcomed by Economy Secretary Keith Brown, although he warned that Brexit was casting a “shadow” over the future.

Brown said: “The latest Bank of Scotland PMI figures highlight the resilience of Scotland’s private sector, with optimism levels increasing at an accelerated pace.

“Although indicators for output and new business in the service sector eased in November, the report showed strong growth in employment with Scotland’s manufacturers turning a corner on new order intake.

“While this is encouraging, Brexit uncertainty continues to cast a shadow over the future economic outlook, threatening jobs, investment and living standards. The Scottish Government will continue to use all of the powers at its disposal to grow the Scottish economy.”

There were also some positive signs for SMEs in Scotland with capacity, employment, GDP and revenue all up.

However, business cost measures, lending and confidence all deteriorated, according to the latest SME Health Check Index from CYBG, owners of Clydesdale and Yorkshire Banks, compiled in association with the Centre for Economics and Business Research Limited (Cebr).

Business confidence among SMEs across the UK was at the lowest level since 2016’s EU referendum.

Oliver Kolodseike, senior economist at Cebr, said: “It is disappointing that SMEs are currently facing an increasingly challenging economic environment.

"With the OBR recently revising down its growth and productivity forecasts for the coming years, SMEs may face a challenging 2018.”