Difficulties in the oil and gas industry are continuing to take their toll on Scotland’s economy, two new reports have indicated.
The Bank of Scotland PMI fell again in March, with this attributed in part to a sharp contraction in the manufacturing sector.
Production in the manufacturing sector reduced by the fastest pace since December 2012, the research found, while activity in the service sector dropped for the second month in a row.
Meanwhile, a separate measure for business optimism was found to be at its lowest for more than two years.
The BDO Optimism Index fell to 99.4 in March, down by just over five points from the total of 104.9 recorded at the same time in 2014.
Martin Gill, head of BDO LLP in Scotland, said: “These figures show that political and economic uncertainty is affecting optimism among Scotland’s businesses.
“The EU referendum, the continued difficulties faced by the oil and gas sector and the economic difficulties being faced in the eurozone and China are all contributing to a mood of insecurity which is hitting investment and growth plans.”
Alasdair Gardner, Bank of Scotland regional managing director for commercial banking in Scotland, said: “Scotland’s private sector experienced harsher business conditions during March as the current downturn intensified.
“Moreover, the struggles endured in the economy’s oil and gas industry continued to take its toll on output and new order levels, which both contracted.
“As a result, job shedding is evident for the fourth successive month as firms looked to cut back on production costs.”
The Bank of Scotland PMI, which looks at conditions month by month in the manufacturing and service sectors, found staffing levels in the private sector continued to reduce in March, continuing a trend which has been in place since December 2015.
While there was a fractional increase in new work for the service sector, new orders in the manufacturing sector fell for the seventh consecutive month, with the report stating that “companies partly associated the decline with a lack of activity in the oil and gas industry”.
Both the BDO optimism index, which looks at predicted growth over the next six months, and the BDO output index, which measures orders companies have for the coming three months, dropped in March.