Private sector activity in Scotland rose in February for the first time in seven months, the latest Royal Bank of Scotland PMI figures have revealed.
The Business Activity Index - a measure of combined manufacturing and service sector output –stood at 51.0, up from 47.1 in January. That shows growth resumed across both the manufacturing and service sectors, with the former leading the expansion, as any figure above 50 indicates a positive balance.
Those surveyed reported an improvement in demand conditions and growth in new clients, as well as a rise in new orders following seven consecutive months of decline.
That also led to the first rise in workforce numbers in three months while cost pressures continued to diminish and confidence rose.
READ MORE: Business confidence bounces back in Scotland
RBS said: “Sentiment was firmly positive and improved further from December's recent low across Scotland in February. Expectations were largely pinned on new product launches, increased marketing and projected growth in customers and sales.
“That said, optimism across Scotland remained muted when compared to the UK as a whole.”
It added: “The pace of job creation across Scotland was faster than the UK-wide average, which also recorded a rise in employment for the first time in three months.”
Companies polled in Scotland continued to reduce their backlogs during February - the ninth consecutive month. Across the UK, backlogs of work rose across the UK as a whole for the first time in four months.
Energy costs and wider inflation led to a rapid rise in input costs, though the rate of input price inflation was the softest in 21 months and weaker than the UK-wide average.
RBS added: “Scotland registered one of the slowest increases in input prices among the 12 UK regions, ahead of the North West and East of England.
“Charges levied for the provision of Scottish goods and services rose sharply in February. Inflation, Brexit and higher costs from suppliers continued to push charges up, according to anecdotal evidence. However, the pace of increase slowed notably to the weakest since April 2021.
“Of the 12 monitored regions, Scotland reported the weakest incline in output charges.”
Judith Cruickshank, chair of the Scotland Board at the Royal Bank of Scotland, said: "Private sector output registered growth mid-way through the first quarter of 2023. The headline index signalled a mild expansion in output and marked the first month of increase since July 2022.
"Firms reported that a revival in customer demand and growth in new clients helped boost sales and activity. Growth in business requirements resulted in higher intakes of staff across both goods producers and service providers, while backlogs fell for the ninth month running.
"Furthermore, with inflationary pressures continuing to cool off, the Scottish private sector reported a modest performance overall, a change from the contractions seen since last August. Additionally, with confidence strengthening to an 11-month high, we hope that the upturn across Scotland will continue in the coming months.”
