This is according to data from the latest Bank of Scotland PMI which showed that the headline seasonally adjusted Bank of Scotland PMI posted 49.9 in October, only fractionally below the 50.0 no-change threshold, and little-changed from 49.8 in September.
Elsewhere, the survey provided mixed messages as to the strength of the recovery; new order levels fell for the first time in nine months, but firms continued to add to their workforces.
Output in the Scottish private economy fell marginally for second straight month in October. Although the rate of contraction was negligible, it contrasted to the trend seen across the UK as a whole, where a mild acceleration of growth was recorded. Where lower activity was reported, this was frequently linked to falling order levels. Manufacturing output rose slightly.
The level of new business received by firms operating in the Scottish private sector fell for the first time in nine months during October, and at a solid pace. The fall was often attributed to strong competitive pressures and weak economic sentiment.
Despite the overall declines in activity and new orders, Scottish firms continued to add to their workforces during October. Nevertheless, the rate of job creation remained weak.
In an attempt to hold up production levels, Scottish firms depleted their backlogs of work during October. This extended the current period of decline to thirty-eight months. The latest reduction was also the sharpest in six months.
Commenting, Donald MacRae, chief economist at Bank of Scotland, said: "The pause in the recovery in the Scottish economy extended for a second month in October, with only a fractional change in the Bank of Scotland PMI. However, there are signs of the manufacturing sector picking up after last month's fall, with a mild rise in manufacturing output seen in October. Goods-producing firms have now recorded output growth in eight of the past nine months. The Scottish economy has slowed but has not gone into reverse."
