Scottish economy 'shrinks as oil downturn bites'

The survey linked a slowdown in the oil and gas industry to a fall in incoming new orders for firms

The Scottish economy contracted slightly last month as a result of a downturn in the oil and gas industry, according to a report.

The latest Bank of Scotland purchasing managers index (PMI) found activity in the private sector dipped in November.

There had been modest growth in the previous month.

The bank's headline index, which measures changes in output in both manufacturing and services, fell to 49.8 from 50.9 in October.

Any figure below 50 suggests economic contraction.

The report found that the decline stemmed from the manufacturing sector, where the rate of contraction was the sharpest in just over three years.

Exchange rates

However, service providers reported a slight rise in business activity.

The survey also indicated a fall in incoming new orders linked to a slowdown in the oil and gas industry.

Despite this, the number of people employed in Scotland's private sector grew, although the rate of job creation was said to be "weak".

Alasdair Gardner, Bank of Scotland regional managing director for Scotland, said: "The headline index fell below the crucial 50 mark in November as a slowdown in the oil and gas industry veered the Scottish economy into contraction.

"The drop in activity stemmed from declining new orders, which was affected by unfavourable exchange rates.

"However, this did not discourage firms from further adding to staffing numbers."