Growth in private-sector business activity slowed sharply last month as uncertainty over the Scottish independence referendum hit the financial services sector.
The latest Bank of Scotland PMI survey for September returned an adjusted headline figure for combined manufacturing and services output of 51.5 for the month.
Any figure above 50 indicates growth, but the rate of expansion was significantly below the 54.6 recorded a month earlier, and the lowest seen in the past 18 months.
The bank said output growth had eased to a multi-month low from the robust pace of August, and new works orders had also dropped back.
However, job creation remained at a steady, solid rate and the survey’s price indicators pointed to a slight rise in average output charges and further solid cost inflation at businesses.
BoS chief economist Donald MacRae said that while there had been a slowdown in the private-sector economy in Scotland in September, the trend was still for positive growth going forward.
He also said output for the month had been hit by uncertainty in the run-up to the Scottish referendum on September 18 in which a No vote was eventually secured.
“The private sector of the Scottish economy recorded a slowdown in the rate of growth in September, with the PMI falling to 51.5 from August’s 54.6, indicating continuing growth but at a reduced rate,” Mr MacRae said.
“Manufacturers showed a fall in new orders, while financial services saw a slowdown in the rate of growth of new business aggravated by the uncertainty created by the referendum.
“Despite this slower increase in business activity, employment increased in both the manufacturing and services sectors indicating continuing confidence for the future and the prospect of a rebound in activity in October.”
* Global uncertainty is causing a steep drop in manufacturing growth expectations, with business costs heading towards deflation, according to a report by business advisers BDO LLP in Scotland.
Output expectations among manufacturers had the steepest monthly fall in September since May last year.
The fall came as a faltering global economy and worsening geopolitical developments rocked short-term growth expectations for the sector, according to the latest business trends report.
The BDO Output Index, which predicts businesses’ growth expectations for the next three months, fell from 103.8 in August to 103.3 in September.
However, the BDO Output sub-index for manufacturers fell from 113.2 to 111.6.