Although conditions remained challenging across Scotland’s private sector in November, the latest Royal Bank of Scotland Regional Growth Tracker signalled a notable uplift in confidence regarding future output.
When asked about their expectations for activity over the year ahead, Scottish private sector companies were strongly optimistic in November. Upbeat forecasts were often underpinned by plans of introducing new products and services and hopes of improved overall demand 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 48.0 in November, down from 49.0 in October.
Anecdotal evidence indicated that lower amounts of new orders and economic uncertainty had driven the latest reduction in output.
Commenting on the Tracker’s findings, Judith Cruickshank, Scotland Board Chair, Royal Bank of Scotland, said: “Our Growth Tracker data shows Scottish businesses continue to face challenges, as output and new orders both continued to contract in November and selling prices rise slower than input prices as businesses try to remain competitive in a challenging demand climate.
“Firms also reduced staffing, although to a lower extent than the UK-wide trend suggesting that the Scottish labour market remains relatively resilient.
“Business confidence, however, improved notably offering a reason to approach the coming year with cautious optimism.”
Performance in relation to UK
The latest survey results highlighted a fourteenth consecutive monthly reduction in new orders placed with companies based in Scotland. The rate of contraction was more pronounced than that seen in October, as well as stronger than the UK-wide average.
According to panel members, reduced client spending and uncertain economic conditions resulted in fewer sales.
Despite registering the largest upswing in confidence of the 12 monitored regions and nations in November, Scottish firms remained less optimistic when compared to the UK-wide trend.
Workforce numbers fell for the second month in a row across Scotland in November. Input from panel members linked the latest decline in employment to a drop in new orders and initiatives aimed at reducing costs. However, the rate of job shedding was identical to that seen in October and only marginal. Furthermore, the decline was the smallest seen of all 12 monitored UK regions and nations, and contrasted with a sharp reduction in headcounts across the UK as a whole.
Scottish private sector firms noted a fall in backlogs of work for a fourth straight month in November. The rate of depletion was solid and broadly in line with the average recorded over the aforementioned sequence. Survey respondents often mentioned that they were able to complete orders at a quicker rate than they received them. However, backlogs across Scotland were reduced at a slower pace than that seen across the UK as a whole.
Average input prices continued to rise rapidly across Scotland's private sector in November. The rate of inflation accelerated to a seven-month high and was the second-sharpest seen across the 12 monitored UK regions and nations, behind Northern Ireland. Firms stated that higher costs largely stemmed from greater salary expenses, but also supplier price hikes.
As has been the case since November 2020, charges levied for Scottish goods and services rose further in the penultimate month of 2025. The rate of inflation eased since October, and in line with the long-run average. While many firms chose to pass on higher costs to clients, others noted that competitive market conditions and subdued customer demand had dampened overall pricing power. Nevertheless, output prices across Scotland rose at a faster pace than that seen at the UK level.